Vietnam Daily News

Adoption of new technologies can lower prices of low-income house by 40pct: VAFI

Written by Dailynews.vn Monday, 12 December 2011 19:22

The housing price for low-income earners in provinces will be only six million dong per square metre and it will be at around 10 million dong/sqm in Hanoi and HCM City if applying new technologies and suitable model, the local newspaper Nguoi Lao Dong (The Labourer) reported on December 10. Vietnam Association of Financial Investors (VAFI) has recently proposed the prime minister to have supporting policies for the investors and people to lower the housing prices for low-income earners whereby the housing price may decrease further by 30-40 percent for small apartments (35-70 square metres) by exempting all relevant taxes and fees and using preferential credit regime. However, the information was assessed to be unfeasible by experts, which mainly aims to help the real estate companies in the difficult period. VAFI proposed the taxes needed to be exempted are 10 percent VAT (value added tax) for low-income earners when purchasing houses, tax on land using right transfer for enterprises, registration tax for house purchasers and corporate income tax (CIT) for companies that are building houses for low-income earners. Regarding preferential credit, the Association asked the Mekong Delta Housing Development Bank (MHB) to provide soft home loans at the interest rate of below 10 percent per year for the house purchasers and enterprises who can fully meet requirements to carry out housing construction projects for low-income people. VAFI believed that people need to spend an initial amount of 200-400 million dong to be able to buy houses priced at 350-700 million dong. Disagreeing with VAFI's recommendation, Dr Dang Hung Vo said: "VAFI's proposal is not a proper solution for the problem of reducing house prices for low-income earners". "This proposal seems to help enterprises benefit from the State but not for low-income earners" Hung added. Sharing the same opinion, Dr Nguyen Truong Tien - former deputy general director of Hanoi Construction Corp noted: "Vietnam's condominium price is more expensive around 100 percent than Asean countries and China's because of the reliance on too many factors and fake information". Reducing housing prices for low-income earners requires the activeness of enterprises in applying new technologies and especially cutting the management costs (including sensitive costs such as interest rates and cost for speeding up projects), Dang Hung Vo proposed a lot of construction technologies such as 3D Panel that may bring housing price down to below 10 million dong/sqm, even at only 6-7 million dong/sqm. But, according to Vo, enterprises ignore to apply these technologies. Meanwhile, Nguyen Truong Tien, said Vietnamese engineers are capable enough to build low-cost housing but the key problem is that enterprises are only caring about the number of apartments to be built and the prices of these apartments instead of seeking and applying new technologies to reduce cost prices. This leads to low-cost housing price at 11.6 million dong per sqm (nearly $600/sqm) while groups of Germany and Malaysia entered Vietnam to offer the technology of building 20-storey building fully by assembly priced at only $200/sqm with the same quality. Tien also recommended the state should carry out a pilot housing programme in five typical locations nationwide and assign Vietnamese engineers to design, apply and build house at the price of 8-9 million dong or 10 million dong/sqm. Deputy minister of Construction, Nguyen Tran Nam, said that the ministry proposed and received approval from the prime minister about its proposal of establishing Housing Saving Fund through surveying the successful fund model in China and South Korea. This will be a non-profitable fund with the purpose of providing soft loans to low-income earners and low-cost house developers. Once formed, the fund's operation may be added with methods of house leasing and purchasing and instalment payment within 10-20 years with the initial deposit of around 20 percent of the house value.

Source: www.intellasia.net/news/articles/business/111350531.shtml