Phạm Sỹ Liêm. — Photo kinhtedothi.vn

Phạm Sỹ Liêm, Vice Chairman of the Việt Nam Construction Association, speaks to the Kinh tế & Đô thị (Economic & Urban Affairs) newspaper on how to help more average income Vietnamese people to have their own apartments

How do you respond to the Hà Nội authorities’ suggestion that urban households affected by new construction projects should be compensated with cash so that they can look for new living places to their own choices?

Generally speaking, most of people living in cities/towns are preferred to decide where they want to live rather than be compensated with resettlement flats or apartments. In other words, they want to receive their compensation in cash. Though the compensation rate given by the project owner was just about VNĐ6.8 million (US$290) per square meter, most of the people were happy with it. For many of them think that with the big lump sum compensation money, they could buy a plot of land to build their house in outlying districts Bắc Từ Liêm or Nam Từ Liêm. But for those who still prefer to resettle in the city’s inner districts like Cầu Giấy, Đống Đa, Thanh Xuân and others, such a compensation price is too low for them. This has led to the problem that many households have refused to resettle in other places and kept demanding for higher compensation price so that they could buy land in places of their choices to build their houses. This is food for thought for project owner before they make their final decision on how to compensate for people who will be affected by their project.

So, in your opinion, what should the project owner do to ensure a balance between their interests and those of the people who are affected by the project?

In my opinion, the compensation mechanism should be based on the following three factors, namely the land price; the asset price; and the cost of moving. Of course, the price quotas must be based on the current market prices.

For example, the resettlement of a household with an average living space of 10sq.m per person would require the project owner to pay them a sum of money equal to the cost of buying a house/apartment of the same area. This is a very tough issue for the project owner to handle. So in my opinion, the compensation money should be based on the position of each specific land resettlement area. In other words, the land price in the Hà Nội City centre must be much higher than those in outlying districts.

To do this, in my opinion, the price of the land should be based on the actual market transaction price. And before making the fincal decision on the price of resettlement land inside the city, the Hà Nội People’s Committee should consult with the general public to make all parties involved happy.

Do you think that Việt Nam should apply the apartment renting model which has been popular in other countries?

This is a good choice for people who have to resettle in other places. In many developed nations, budget apartments for hire has gained traction in the housing market. For example, in Japan, Austria, Singapore, Great Britain, South Korea, Denmark and others, cheap apartments for rent are run by certain social welfare organisations and these organisations receive financial support from either the central or local Governments. As a result, there is always a ceiling rate in the rent.

In some cities, local governments have even set a certain percentage of the apartments to be rent at low cost.

Under the Vietnamese law, investors must allocate at least 20 per cent of their land to build social housing apartments. But in reality, this policy only stays on the paper. In your opinion, what should we do?

There are various ways that we can enforce the law.

For example, the Government should come up with attractive policies/mechanisms for the investors who are willing to allocate some 20 per cent of their project land to build social housing apartments. Small apartments for rent, for example between VNĐ3-5 million ($129-215) per month will be attractive to many low-income people in Việt Nam. What is more important, such cheap apartments for rent or low cost commercial housing, has not yet been available in Việt Nam.

I’m pretty sure with low renting cost – yet good quality apartments, many people with average or low income, including people having their land use revoked for public projects, have been looking for such apartments. — VNS