Local officials need to help solve legal problems for real estate market: ministry leader

Legal problems are a major obstacle facing Vietnam’s long-ailing property market but provincial authorities have failed to assist the government to remove bottlenecks, a senior Ministry of Construction official said.

“Trying to deal with legal issues hindering real estate projects in their localities, provincial administrations kept asking the government for clarity and directions though the instructions and guidance have already been issued and clear,” said Nguyen Manh Khoi, deputy director of the ministry’s (MoC) Housing and Real Estate Market Development Department.

"They are reluctant to make decisions over fears of making mistakes. Answers from the government in many cases could take a few months, meaning the delays are prolonged,” Khoi told a Friday seminar held by The Investor in Ho Chi Minh City on measures to unleash domestic and foreign investment capital in the Vietnamese realty market.

The government has spent several months making greater efforts than ever before to remove market woes, according to Khoi. Govermental-level working groups, led by deputy prime ministers, have been set up to solve prolonged problems in the market for its safe, healthy and sustainable development like Resolution 33.

Khoi stressed that the ailing market needs developers to streamline their business structure, investment plans and actions, instead of relying on assistance from regulators to help them out of the woods.

For regulators, he said management agencies need to flexibly and synchronously operate monetary policy tools, unleash investment flows for socio-economic development; continue to improve mechanisms and policies to mobilize financial resources at home and abroad for both housing development and the development of the real estate market.

The MoC authority added other measures include extending loan payment terms for property developers in market trouble, and financially supporting investors and buyers of housing products in order to revitalize the market.

"Speculation and cornering the market need to be prevented, while developers with sufficient competency should be supported in getting bank loans to help put more energy into the ailing market."

Can Van Luc, chief economist at BIDV bank, suggested some measures, with the first group being from the financial and capital markets. An approach to the group is to ensure the sustainable development of the financial and capital markets, while continuing to focus on implementing the nation’s post-pandemic recovery program.

Luc stressed high lending rates are barriers against the development of all economies worldwide, not just in Vietnam, therefore the Vietnamese government has repeatedly made orders on lower interest rates to support growth.

“Good news is interest rates in Vietnam are on the decline and will probably keep going down,” he said.

Like Khoi, the veteran economist said government officials in different levels need to speed up the solving of legal problems. For long-term purposes, lawmakers are seeking to amend and improve the Securities Law, Enterprise Law, Land Law, Housing Law, and Real Estate Business Law.

To date, a credit package of VND120 trillion (about $5 billion) for the development of social housing and workers’ housing projects is already in place to help stir the market.

HCMC Real Estate Association chairman Le Hoang Chau said that Vietnamese regulators should study another package for the same purpose, with its size being VND110 trillion (over $4.69 billion). He said two packages would probably work better than one.

Also from a business perspective, Chau said it is necessary for companies to be able to access capital sources as the current credit crunch keeps the market from recovering.

Also good news is, he said, the government is poised to issue ownership certificates to those who have bought housing products from condotel and officetel projects.

Speaking at the seminar, Dung Duong, executive director of leading property services firm CBRE Vietnam, said foreign investors keep having a strong interest in the Vietnamese realty market.

“CBRE Vietnam has met with many foreign firms who want to invest in the market during the first quarter. Among them are ones from completely new places like Dubai, Saudi Arabia, and South Africa, not just from familiar sources like Singapore, Hong Kong, and the like,” she said.

Nguyen Cong Ai, partner at KPMG, told the seminar that Vietnam needs to boost up market confidence amid prolonged global economic headwinds so that FDI flows may continue to reach Vietnam. He made clear that some major M&A real estate deals proposed by foreign companies started a few years ago but yet to finish due to a wait-and-see attitude.

Veteran economist Vo Tri Thanh, former deputy chief of the Central Institute for Economic Management (CIEM), said global headwinds will continue to last but the Vietnamese government is taking action in many areas, and the realty market is expected to become warmer with some improvement in the second half of the year or the fourth quarter.

CBRE Vietnam’s Dung said her firm would have re-meetings with foreign investors in the fourth quarter.

Representatives of property developers attending the seminar said the Vietnamese government has determinedly taken continuous measures to remove market woes, therefore the market is expected to begin seeing some signals of a warm-up in the fourth quarter.

According to economist Thanh, Vietnam is still a potential market for foreign investors. On March 21-23, more than 50 American major companies in the largest-ever U.S. business mission came to visit Vietnam to sound out opportunities.

"Vietnam has cemented its status as a new production base for multinational companies in the “China plus one” trend and their global supply chain diversification, while another clear advantage Vietnam offers is it has 15 free trade agreements of international level," he said.