In 17 manufacturing centers in Ho Chi Minh City, only 8% of staff live in designated accommodation, while the rest rent out, said HCMC Real Estate Association (HoREA) President Le Hoang Chau at a recent forum.
The city’s largest employer, shoe maker Pouyuen in Binh Tan district, has 80 percent of employees renting houses in neighboring Long An province, he added.
The biggest hurdle is profitability, industry insiders have revealed.
Le Huu Nghia, director of Le Thanh construction company, who has years of experience in building low-cost housing, said the profit margin of only 10-15% of social housing projects is much lower. to that of commercial equivalents.
Construction of such projects takes around five years and could deprive companies of the opportunity to make more money elsewhere, he said, adding that pressure from shareholders was also pushing developers to neglect social housing.
Truong Anh Tuan, chairman of real estate developer Hoang Quan Group, hailed as the largest social housing developer in Vietnam, said the 10% profit margin of a social housing project is well below 50% of commercial projects.
Although the company still conducts social housing projects, it has prioritized commercial projects to ensure profit, he added.
The government had set a target of 12.5 million square meters of social housing in 2016-2020, but only managed 5.2 million square meters, according to the Ministry of Construction.
This translates to 104,200 units out of 249 projects.
Another major challenge for developers is the complexity of procedures in social housing projects, other industry insiders have said.
“It is much more difficult and longer to complete a social housing project than a commercial project. Some have not finished for three years,” Nghia said.
There are currently no separate construction standards for social housing, but standards for commercial projects are used, he said.
The official post-construction review is also a burden, as companies are assessed more strictly to see if they have committed any violations, he added.
“There are challenges early on and even after construction is finished, which is why we are not meeting the social housing targets.
HOREA reported other difficulties in developing social housing projects, including delays in disbursing public funds, high taxes, profit margins that cannot exceed 10 percent of total investment, and legal risks. students.
The Ministry of Construction has proposed that 30 trillion dong ($ 1.32 billion) be spent on developing social distancing housing in the form of credit.
Other incentives such as lower value added tax, corporate tax and loan interest should also be given to developers of this type of housing, he added.