Blogs

Mr. Le Tu Minh, Chairman of IMG Investment JSC: The key to addressing the difficulties in the real estate market, which the Government is currently focusing on, lies in three main issues.

First, preventing land speculation. Currently, many people buy land and wait for prices to rise. As a result, part of the country's productive resources remains unused, leading to significant waste.

Other countries have used taxation to control speculation. We have a project in Australia, where we pay an annual land tax of 2%. Land values are independently assessed each year by the tax authority. Before starting the project, we have to pay between 700,000 and 800,000 dollars in land tax annually. This year, the local government decided to increase the tax rate to 4%, which is very high.

Mr. Le Tu Minh, Chairman of IMG Investment JSC, attends and shares his views at the conference

If Vietnam applies this policy, only those who genuinely intend to develop projects will be willing to hold land. Once they acquire land, they will also have to implement their projects quickly. This measure would not only prevent land speculation but also provide the Ministry of Finance with a significant source of revenue.

We recommend that the committee drafting the Land Law include an annual land tax of 2% and apply a progressive tax to land that is not put into business use or does not generate income, similar to the practices of other countries.

Second, we would like to thank the State Bank of Vietnam (SBV) for taking timely measures to stabilize the real estate market. However, interest rate increases should have a defined duration and measurable limits.

It is time to reduce medium-term interest rates to below 10%. Developed countries apply medium-term interest rates of 3–5%. When medium-term interest rates are high, businesses are unwilling or afraid to borrow, while customers direct their money into other sectors instead of real estate. Medium-term interest rates should be lowered to around 8.5%, with some flexibility, as they were two years ago, so that Vietnam can continue to be one of Asia's economic dragons.

Measures should also be introduced to prevent or limit real estate businesses from participating in the banking sector and vice versa. Businesses operating in both sectors tend to raise capital from society mainly for their own operations, bringing limited benefits to society as a whole.

Third, resolving legal obstacles and administrative issues. The greatest difficulty currently facing real estate businesses is the overlap in legal regulations. The same issue or regulation can be interpreted in different ways, leading officials responsible for implementation, particularly at the local level, to avoid taking action because they are unwilling or afraid to do so.

In our company, every assignment comes with a deadline. If an employee misses a deadline without a valid reason or approval from their supervisor to adjust it, they may face a penalty or be transferred to another position. However, government officials may delay or fail to perform their duties without facing consequences. We understand that the losses caused by project delays can be greater than those caused by corruption.

We recommend establishing clear regulations on the delegation of authority and responsibilities at different administrative levels, specifying the tasks to be completed, completion deadlines and accountability for delays.

IMG's leadership also proposed that the Ministry of Planning and Investment allow Vietnamese businesses to extend their land lease terms or pay land fees for a 70-year period. This would give industrial parks sufficiently long lease terms to remain attractive to potential tenants. Such a measure would comply with the law while increasing revenue for local authorities.

The conference was chaired by Prime Minister Pham Minh Chinh. Attendees included Deputy Prime Minister Le Minh Khai, Deputy Prime Minister Tran Hong Ha, the Ministers of Construction, Finance, Natural Resources and Environment, and Planning and Investment, as well as the Governor of the State Bank of Vietnam (SBV).

Representatives from the National Assembly's Economic Committee and Law Committee were also invited to attend.

Chairpersons of the People's Committees of provinces and cities were among the invited participants.

The conference also brought together six major banks, including Vietcombank, Vietinbank, BIDV, Agribank, Techcombank and MBbank, along with many leading real estate groups such as Vingroup, SunGroup, Novaland, IMG, GP.Invest, Ecopark, Geleximco, Hoang Quan, Becamex IDC and Hung Thinh.

Other participants included HUD, Handico, UDIC and Hancorp, as well as construction companies such as Vinaconex and Hoa Binh.

The Ho Chi Minh City Real Estate Association (HoREA) was also invited to the conference.

Prime Minister Pham Minh Chinh delivers his remarks at the conference. Photo: Duong Giang/VNA

The real estate market shows positive signs of recovery

Speaking at the conference, Prime Minister Pham Minh Chinh emphasized that despite numerous difficulties and challenges caused by both external and internal factors, Vietnam's socio-economic situation continued to improve during the first seven months of 2023. This progress was achieved through the strong and effective leadership of the Party, the efforts of the entire political system, and the participation of the business community, citizens and international partners.

Prime Minister Pham Minh Chinh speaks at the conference.

Macroeconomic stability was maintained, inflation continued to decline, major economic balances were secured, and the economy continued to grow. Production and business activities were gradually improving. Public debt, government debt and the budget deficit remained under control. The real estate sector made a significant contribution to these overall socio-economic achievements.

According to the Prime Minister, real estate and the real estate market play an important role in the economy, with direct and wide-ranging impacts on citizens, businesses, economic growth and development. Currently, both cash flows and credit in the economy are closely connected to real estate.

Following the Government's issuance of Resolution No. 33/NQ-CP dated March 11, 2023, on several solutions to address difficulties and promote the safe, healthy and sustainable development of the real estate market, ministries and agencies actively researched, developed and issued various mechanisms and policies. They also advised and submitted proposals to the Government and the Prime Minister for the timely resolution of difficulties and obstacles facing the real estate market.

Together with other specific policies on banking, credit and investment, these measures have contributed to positive signs of recovery in the real estate market.

This demonstrates the Government's strong commitment and determination to support and rescue the real estate market, preventing widespread market failures that could affect the recovery and development of the economy.

Online conference reviewing the implementation of Government Resolution No. 33/NQ-CP dated March 11, 2023, and proposing solutions to address difficulties and obstacles in the real estate market.

The Prime Minister pointed out that, despite its positive contributions, the real estate market continued to show signs of instability and unhealthy development. Recovery remained slow, and real estate businesses still faced many difficulties. Problems and obstacles in the corporate bond and real estate markets had only been addressed at an initial stage, without fundamental, sustainable and effective solutions.

"Problems that have existed for many years cannot be resolved overnight. They must be addressed step by step, tackling difficulties wherever they arise and resolving obstacles at the appropriate administrative level. Authorities at all levels, ministries, agencies, businesses and citizens must take responsibility and work together in the spirit of 'harmonizing the interests of the State, businesses and citizens' and 'harmonizing benefits and sharing risks.' The goal is to promote the stable, safe, healthy and sustainable development of the real estate market," the Prime Minister emphasized.

Many real estate projects continue to face difficulties and obstacles

Reporting at the conference, Deputy Minister of Construction Nguyen Van Sinh stated that real estate and housing supply remained limited in the second quarter of 2023. Only seven projects were completed, providing 2,424 units, including 852 apartments and 1,572 individual houses. The number of completed projects was equivalent to approximately 50% of the first quarter of 2023 and around 29.17% of the second quarter of 2022. Many projects were delayed or completely suspended due to legal difficulties, capital shortages and other obstacles.

In the second quarter of 2023, there were 96,977 successful transactions. Transaction prices for newly built apartments in certain areas of major cities, such as Hanoi and Ho Chi Minh City, were reported to have increased significantly despite signs of a slowdown in the real estate market. Selling prices in the resort real estate segment continued to decline, although the decrease was less significant than at the end of the previous year because capital costs remained high. Meanwhile, selling prices for villas and land plots within projects in many localities continued to fall by approximately 2% to 5% compared with the previous quarter. Prices could continue to be adjusted to more suitable levels, reflecting the investment value of the products and the surrounding infrastructure in the coming period.

According to a report by the State Bank of Vietnam, as of May 31, 2023, outstanding loans for real estate business activities reached VND 925,796 billion. Credit for real estate businesses increased by 14% during the first five months of the year.

Capital raised through corporate bond issuance in the real estate sector changed significantly in June 2023, with 13 private placements totaling VND 8,170 billion. Interest rates were relatively high, at 12–14%, compared with the general market level. This represented a sharp increase from May 2023, when only one business successfully issued bonds worth VND 2,600 billion, according to the Vietnam Bond Market Association.

At the conference, leaders of ministries, agencies and local authorities reviewed the achievements and shortcomings of their respective organizations during the implementation of Resolution No. 33 and related policies issued by the Government and the Prime Minister. They also proposed solutions for real estate projects facing legal obstacles, suspended operations or difficulties bringing products to market. The aim was to release land resources and investment capital while reducing the risk of bad debts in the banking system. Participants also discussed difficulties in implementing the project to "Invest in the construction of at least one million social housing units for low-income people and industrial park workers during the 2021–2030 period."

After listening to comments from leaders of ministries, agencies, local authorities and businesses, Prime Minister Pham Minh Chinh emphasized that real estate is one of the pillars of the economy. He highlighted the importance of regulating and restoring the market while controlling risks. The Government and the Prime Minister remained determined to direct efforts and work alongside local authorities and businesses to address difficulties in the real estate market.

Deputy Minister of Construction Nguyen Van Sinh reports on the implementation of Government Resolution No. 33 concerning the real estate market

The Prime Minister stated that following the Government's issuance of Resolution No. 33/NQ-CP dated March 11, 2023, on several solutions to address difficulties and promote the safe, healthy and sustainable development of the real estate market, ministries and agencies had actively researched, developed and issued various mechanisms and policies. They also advised and submitted proposals to the Government and the Prime Minister to address difficulties and obstacles in the real estate market in a timely manner. Together with other specific policies on banking, credit and investment, the real estate market had shown positive signs of recovery. This demonstrated the Government's strong commitment and determination to support the real estate market and resolve its difficulties.

The Prime Minister called for close adherence to the Party's guidelines and policies, as well as the State's laws and regulations. Management and direction should be proactive, flexible, creative, timely and effective, ensuring that measures are appropriate to actual conditions and practical needs. Economic and civil relations should not be criminalized, and officials who act correctly should be protected. The interests of the State, citizens and businesses must be balanced. Authorities should not panic, hesitate or fear difficulties, challenges and changes. At the same time, they should not become overly confident after achieving success, neglect their responsibilities, become complacent when conditions improve or miss opportunities.

Regarding general tasks, the Prime Minister requested that ministries, agencies and local authorities continue to urgently and strictly carry out their assigned responsibilities under Directive No. 13/CT-TTg, Government Resolution No. 33/NQ-CP on solutions to address difficulties and promote the safe, healthy and sustainable development of the real estate market, and other directions issued by the Prime Minister.

Priority should be given to promoting social housing development under the Prime Minister's Decision No. 338/QD-TTg dated April 3, 2023, and accelerating the disbursement of public investment capital and preferential loans to create momentum and wider benefits for production and business activities.

Regarding specific tasks, the Prime Minister assigned the Ministry of Construction to continue researching and completing the draft revised Law on Housing and revised Law on Real Estate Business. These were to be reported to the Government and submitted to the National Assembly for consideration and approval at its sixth session in October 2023, ensuring a consistent, unified and practical legal framework.

The Ministry was also instructed to coordinate with other ministries and agencies to direct and guide local authorities and businesses in effectively implementing the project to "Invest in the construction of at least one million social housing units for low-income people and industrial park workers during the 2021–2030 period." It was also tasked with guiding and urging local authorities to review, prepare and publish lists of investors in social housing, worker housing and apartment renovation and reconstruction projects. In addition, the Ministry should continue reviewing, monitoring and providing guidance to resolve difficulties and obstacles in the implementation of real estate projects for local authorities and businesses in provinces and centrally governed cities.

The Prime Minister requested that the State Bank of Vietnam continue reviewing credit lending to real estate businesses and introduce suitable and effective measures to help businesses, real estate projects and homebuyers access credit more easily. These measures would contribute to resolving difficulties and promoting the safe, healthy, efficient and sustainable development of the real estate market. Particular attention should be given to the effective implementation of the approximately VND 120,000 billion preferential credit program for social housing, worker housing, and apartment renovation and reconstruction projects.

The Prime Minister assigned the Ministry of Planning and Investment to direct, urge and guide local authorities in resolving difficulties and obstacles related to investment procedures and investment policy approvals for housing and real estate projects, including urban social housing and worker housing, to increase market supply.

The Ministry of Finance was instructed to carefully and specifically review and assess the payment and repayment capacity of organizations and businesses issuing bonds, including real estate businesses, particularly bonds due for payment in 2023 and 2024.

The Ministry was also tasked with controlling capital-raising activities by real estate businesses in the stock market to prevent speculation, manipulation and artificial price increases. At the same time, effective measures should be introduced to promote the healthy and sustainable development of the stock market and corporate bond issuance.

The Ministry of Natural Resources and Environment was instructed to urgently complete and submit to the Government for consideration and issuance a decree amending and supplementing Decree No. 44/2014/ND-CP dated May 15, 2014, on land valuation methods, the development and adjustment of land price frameworks and land price tables, specific land valuation, and land valuation consultancy activities under simplified procedures. The Ministry should also guide local authorities in resolving difficulties and obstacles related to land valuation.

For local authorities, the Prime Minister requested the implementation of the tasks and solutions outlined in Resolution No. 33/NQ-CP dated March 11, 2023, on several solutions to address difficulties and promote the safe, healthy and sustainable development of the real estate market. They should focus on reviewing and resolving difficulties and obstacles in the implementation of real estate projects within their areas. They were also instructed to urgently carry out the specific tasks assigned under the Prime Minister's Decision No. 338/QD-TTg dated April 3, 2023, approving the project to "Invest in the construction of at least one million social housing units for low-income people and industrial park workers during the 2021–2030 period," as well as the VND 120,000 billion credit program for social housing, worker housing, and apartment renovation and reconstruction projects. Local authorities should also consider simplifying and shortening administrative procedures within their authority and clearly identify the agencies responsible for handling administrative procedures related to the preparation and approval of housing projects, including social housing projects.

For businesses, the Prime Minister requested that they continue to proactively review and restructure their operations, investment portfolios and product structures to ensure alignment with their financial capacity, business scale and management capabilities, as well as the actual needs of society. Businesses should also review and restructure their capital sources and focus on resolving bad debts and debts due for payment. These measures would create the foundation and conditions needed to access credit, bond and stock market funding for project implementation.

In addition, the Prime Minister assigned ministries, agencies and relevant authorities to proactively address difficulties in the real estate market within their respective responsibilities and areas of management, and propose solutions for emerging issues beyond their authority.