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NEW POLICIES EXPECTED TO BOOST REAL ESTATE MARKET
The policy innovations of the Government to remove difficulties for the economy are expected to open up opportunities and incentives for businesses operating in many different fields, including real estate. These are important support policies coming just in time to create a big push for the real estate market and other related businesses to recover after the COVID-19 pandemic.
Is a legal overlap in the procedure an obstacle?
According to Dr. Vu Tien Loc, President of Vietnam Chamber of Commerce and Industry, real estate and construction is one of the fields creating the most jobs in the economy, at the same time, it also helps develop other related fields. However, along with its role as a driving force for development, this field may risk destabilizing the economy if it is not well managed. The real estate market is growing unstable due to the impact of COVID-19, but the real estate supply decline is due to policy mechanisms. The legal overlaps in the procedure are hindering the increase in supply on the real estate market, while demand is still high, especially in the segment of social housing and affordable housing. The number of newly established enterprises decreased by 12% from the same period, construction enterprises suspended business by 94% in the first quarter of 2020 and real estate inventories increased.
The real estate market is very much related to different policy mechanisms such as Land Law, Investment Law, Housing Law, and laws related to taxes and fees. Mr. Nguyen Manh Ha, Chairman of Vietnam Association of Realtors, said that real estate business is particularly sensitive to the change of policies. New documents that are issued to remove many problems sometimes conflict with other regulations that make it difficult for businesses.
According to Dr. Vu Tien Loc, there are currently 20 overlapping points in land and construction policies. VCCI proposed to the National Assembly and the Government to review and eliminate those irrational overlaps. Getting rid of these inadequate overlaps is an important driving force for the development of investment and construction.
Mr. Dennis Ng Teck Yow, General Director of Gamuda Land Ho Chi Minh city, said that simple administrative procedures, the transparency of legal policies, and regulations on fast investment approval would facilitate foreign investors to invest in Vietnam, as well as encourage them to make long term commitment in this market.
Promoting support package for the development of domestic enterprises
To solve the difficulties for the real estate market in general as well as real estate businesses in particular affected by the COVID-19 pandemic, Dr. Vu Tien Loc said that the first thing was promoting existing support packages and issuing new support packages for the real estate market, especially medium and long-term credit packages for important projects. Monetary policies need to be flexible, but we also need macroeconomic stability. Fiscal policy must create more favorable conditions to address the liquidity and investment problems of enterprises. “We welcome foreign investors but emphasize the development of domestic enterprises. The new support packages should be implemented in the direction of strongly promoting domestic enterprises, which are the foundation of the self-reliant economy,” said Dr. Vu Tien Loc.
According to Deputy Minister of Construction Nguyen Van Sinh, the Government has issued many timely policies to implement the "dual goals" of promoting production and business activities while effectively combating the disease, including Resolution 41/NQ-CP of April 9, 2020, and Resolution 84/NQ-CP of May 29, 2020. Most recently, Resolution 91/NQ-CP of June 11, 2020, outlined a number of basic solutions. Specifically, the Government will temporarily reduce or suspend some fees and charges: 15% reduction of the 2020 rent for land plots leased directly from the State, applicable to renters making annual rent payments who were forced to suspend their operations due to the COVID-19 pandemic; 2% reduction of interest rates on loans disbursed to eligible SMEs from the Small and Medium Enterprise Development Fund. The government has approved a 30% reduction of corporate income tax for 2020 for small and extra-small enterprises.
Mr. Sinh said, the Government has implemented of a number of solutions to support the real estate market including the solution to promote the development of social housing which received an additional VND1 trillion for the Social Policy Bank under Decree 71/2018/QH14 and an additional VND2 trillion to subsidize interest rates for four commercial banks designated by the State Bank of Vietnam.
In addition, there are also amendments and supplements according to the shortened process of some contents of the Government's Decree 100/2015/ND-CP on social housing development. The Ministry of Construction will finalize the draft resolution on promotion of low-priced commercial housing and submit it to the Government for approval in the third quarter of 2020. This resolution will provide many groups of incentive policies on land use fees, taxes, construction investment procedures, and capital mobilization mechanism to create favorable conditions for enterprises to invest.
The Government is also focusing on amending and supplementing Decree 101/ND-CP on renovating and rebuilding old apartments. There will be many new points to remove barriers and obstacles in order to attract businesses to invest in renovating old apartments in big cities. The Government will continue to improve the legal system, regulations related to real estate investment and business activities to ensure consistency in the legal system.
“The real estate market is recovering well; there will be many opportunities. New policies have been issued, the market has many bright spots, and we can totally believe in this market and join hands to promote the development of the real estate market, making a common contribution to the development of the country," Dr. Loc said.
Vietnam’s GDP growth is forecast at 3.1% in 2020 before rebounding to 7% next year, while ASEAN+3 growth is predicted to sink to 0% in 2020, according to the ASEAN+3 Macroeconomic Research Office (AMRO).
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