As the management of a large real estate company with many projects in the country, Mr. Nguyen Viet Cuong – Chairman of Kosy Group acknowledged that the legal system for the real estate market is not close to reality.

Lack of practicality and consistency

It lacks practicality since, according to Mr. Cuong, under the Decree No. 45/ND/2014-CP by the Government stipulating the collection of land use fees for projects, enterprises have to pay the whole amount in the first phase of the project.

“In reality, at that time, most of the projects have just started to be implemented without any revenue, while there are many large expenses to compensate for ground clearance, leveling, construction, etc. In addition, according to the promulgated regulation, the land projects will be eligible to mobilize advance capitals from customers when the investors have completed the construction of basic infrastructure. This makes enterprises hesitate when considering capital capacities in difficult market conditions” – Mr. Cuong said.

Mr. Cuong argues that Hanoi alone has hundreds of projects waiting to be implemented and not all enterprises have financial capacity to proactively implement projects without encountering problems of capital mobilization. Therefore, Mr. Cuong suggests that the state authorities amend a number of regulations. It can be divided into several durations during the implementation period of the projects or the life cycle of the projects, facilitating the self-financing of enterprises.

In addition, it is suggested that the state authorities do research and consider allowing enterprises to mobilize advance capitals of customers sooner, and at the same time set out the regulations and necessary binding conditions  to control the operations of enterprises, ensure the use of advance capitals for the right purposes and commitments, and protect the interests of customers.

Mr. Nguyen Huu Cuong – Chairman of the Board of VITC JSC frankly said that the policies lacked consistency since there were too many taxes being imposed on enterprises such as real estate tax, corporate income tax, tax on property buyers and owners. Every draft or tax issued affects the psychology, especially the interest of foreign enterprises.

“In the context of widespread integration with the demand for financial resources from foreign investors, in my opinion, we should carefully and cautiously consider tax law drafts.” With regard to the draft of the Law on Taxation and Property, he proposed to suspend it. If no official information is available, such information should not be leaked since it significantly affects the investment environment and real estate enterprises.

To attract foreign investors, Mr. Matthew Powell said that more than ever the policies should change from access to land funds to open and transparent real estate auctioning.

Further amendment

As a member of the National Financial and Monetary Policy Advisory Council, Mr. Can Van Luc acknowledged that there are currently about 4-5 policies affecting the real estate market such as the Directive No. 03/CT-TTg dated 25 January 2017 on promotion of social housing development; or the State Bank controling risk through the the Circulars No. 06 and 36, increasing the risk of real estate loans up to 200%; or the story of deep and widespread international integration in the period 2018-2020, specifically the prospects of VN-EU FTA, CPTPP, etc., which will be the factors increasing the demand for real estate.

In addition to the prospects, Mr. Luc pointed out one of the shortcomings in real estate finance which is the housing savings fund failed to develop mainly due to lack of capital, mechanism, methods, etc., which are not suitable for the market. In addition, the Financial Institutions System is not diversified. Particularly, it lacks or has not yet developed financial institutions such as Real Estate Investment Trust – REIT, housing mortgage lending agency, etc., which are the barriers preventing the development of housing finance market.

To obtain long-term capital for the real estate market, Mr. Can Van Luc suggested that the Government establish a real estate trust fund to increase the market liquidity, and establish a real estate valuation center, and especially develop the capital market from stocks and bonds. “It is necessary to have a common housing savings fund like Thailand and Singapore,” Mr. Luc said.

As a consultant for the Government, Mr. Luc also reassured that the Government has not yet increased the tax since the story of tax collection expansion should be seriously considered as it would affect the people, market and enterprises.

Sharing with the Business Forum, Mr. Vu Van Phan – Deputy Director of Housing and Real Estate Market Management Department (Ministry of Construction) said that the policies acted as a solid base for the sustainable development of real estate. Therefore, entanglements from the policies must be removed from the policies. The major spirit of the management agencies is to post-check the policies, accept the current status to continue correction and amendment.

“The Ministry has put together five laws and study for drafting, consulting, and will submit them to the National Assembly at the next session related to the real estate market. Focus will be made on the simplification of procedures, reduction of business conditions, and creation of more favorable conditions for investors” – Mr. Phan confirmed.

– Luu Van – Business Forum Newspaper –