Laos 8th national socio economic development plan

Hanoi’s iconic Hoan Kiem Lake is adored by tourists and locals alike, but many surrounding areas are simply too full

Located deep in an alley on Hang Buom street is house No.53, built over 100 years ago. Although severely degraded with many cracks appearing in the rotten walls and stairs, the 3-storey house with dozens of apartments has been the residence for nearly 200 people for many years.

Nguyen Trung Truc, a resident living in an apartment on the first floor said, “The house has signs of dilapidation and the entrance to the house lacks sunlight, so it is dirty and dark. When opening the door, the smell flies straight into the house. Every time it rains, the house and the yard are wet.”

Truc’s family and the households who live here all want to have a new spacious and cleaner place, but what they worry about most is how to earn a living after moving, when their current income mainly depends on street trading in the Old Quarter.

With a history of more than 1,000 years, the area is both an administrative and commercial centre and a place with great historical value, architecture, and culture. The 36 traditional craft streets represent business activities, attracting not only people in Hanoi but also people in the surrounding areas to come here for settlement.

Over the years, the rapid population growth has narrowed the land fund in the Old Quarter, creating great pressure on infrastructure, causing cramped and messy conditions which, in turn, affects the urban appearance and affection of international tourists to Hanoi, and is also related to damage caused to many historical monuments.

Therefore, the relocation of the population in the Old Quarter area is considered a top priority of Hanoi’s administration in urban reconstruction and conservation of cultural heritage.

According to the urban planning, 215,000 residents in Hoan Kiem, Ba Dinh, Dong Da, and Hai Ba Trung will be relocated by the end of the decade. The land fund released from relocation will be used to restore monuments, build transport systems, reconstruct urban areas, and add additional public works such as parks, squares, and car parks.

Higher quality of life

According to data from the 2019 Population and Housing Census, the population density in Hoan Kiem district stood at around 39,800 people per kilometre, 137 times higher than the national population density. The Old Quarter alone now boasts about 4,300 houses. On average, about 3-4 families can live together in one house. There are some houses with dozens of families, for which the living area amounts to only 0.5-1.8 square metre per person.

Of the nearly 1,000 homes with a life expectancy of less than 100 years, 63 per cent are in degradation, 12 per cent are in danger, and 5 per cent are polluted.

Poor and unsafe living conditions are the reason for a number of accidents, ranging from daily inconveniences to house collapses. With such high population density in a cramped area, relocation is the first solution to reduce the pressure on the inner city.

“People here say they are very unhappy because their current accommodation is degraded and potentially dangerous so they cannot live there for long. If a new place can ensure essential services and solve the livelihood problem, we will be ready to move,” said Nguyen Manh Cuong, a resident in Cua Nam ward of Hoan Kiem district.

Pham Tuan Long, Chairman of Hoan Kiem People’s Committee said the plan to lower the population in the four districts from the current 887,000 to 672,000 by 2030 remains associated with similar projects the district has implemented over the years. In addition to regulations on the relocated people, the city also plans to prepare resettlement areas for residents.

“The zoning planning aims to offer the best conditions for people. I am also willing to move if I am in the clearance area. Moving to a new place, people will have better living conditions and leave land for the city to re-plan for a more beautiful capital,” Long said.

Preserving heritage

In addition to improving the urban living environment, one of the plan’s goals is to develop culture and preserve heritage sites and monuments of the Old Quarter. The most visible examples of the pressure created by the high population density are the many monuments, temples, and pagodas in the area that are spoiled by restaurants and parking lots. There are even relics being requisitioned to function as stands for goods.

For example, Vinh Tru Pagoda on Hang Luoc street is recognised as a famous cultural destination in the Old Quarter. For many years its facade has often been occupied by surrounding shops as a parking place, which not only affects tourists but also lessens the majesty of such ancient architecture.

According to Assoc. Prof. Dr. Luong Tu Quyen from the Faculty of Urban and Rural Planning of Hanoi Architectural University, the rapid and disturbing transformation of monuments on central streets will become increasingly difficult to control.

Regardless of the purpose, Quyen says, population relocation is required in inner-city planning to preserve and improve the quality of life, while promoting traditional values in the Old Quarter. However, population relocation also needs to ensure the preservation of long-term habits and livelihoods for people, he added.

These plans are nothing new. Over 20 years ago the city implemented a plan to rearrange the old town and had a policy of relocating universities, hospitals, head offices of ministries, and more from the historic inner-city area. Yet today it still has not found a solution to the problem of improving long-term livelihoods.

Meanwhile, thousands of households in the Old Quarter mainly depend on business and retail trading activities, leading to disagreements within the people living here. The people who are determined to stick around are mostly households close to the roads. Others that voluntarily relocate are residents living in old deteriorated houses, with an area of less than 5sq.m per person.

Economic and cultural experts all say that relocation on such scale would not be easy because it relates to thousands of households of many generations, especially families who have lived for many generations in Hanoi’s Old Quarter.

The key to a successful relocation, they say, could be to solve the problem of interests between people and heritage conservation.

Sustainable bonds are considered as an effective capital mobilization channel from the private sector for environmental and social projects.

The State Securities Commission of Vietnam (SSC) has launched a manual providing instruction on green, social and sustainability bonds.

Green bonds would help accelerate sustainable development in Vietnam. Source: World Bank/jamesteoh

The manual came from the cooperation among the SSC, Climate Bond Initiative (CBI), and Swiss State Secretariat for Economic Affairs (SECO), with the aim of providing guidelines for issuers and market participants to adopt regional, international and Vietnamese standards on green, social and sustainability bonds – or sustainable bonds, collectively.

“Those sustainable bonds are considered an effective capital mobilization channel from the private sector for environmental and social projects, which in turn support the realization of sustainable development goals and the 2015 Paris Climate Accord,” stated the SSC.

“As a member of the ASEAN Capital Markets Forum (ACMF), the SSC has been actively involving in the promotion of the ASEAN Green Bond Standards (AGBS), ASEAN Sustainability Bond Standards (ASUS), which are based on the International Capital Market Association (ICMA)’s Green Bond Principles, Social Bond Principles, and Sustainability Bond Guidelines, with an aim to form sustainable assets in Vietnam,” added the stock market watchdog.

SSC’s Vice Chairman Pham Hong Son expected the manual to help local investors better understand international practices on the issuance and management of capital for green projects, as well as disclosing information on the social and environmental aspects of each enterprises.

“Such step is important to promote sustainable development in each enterprise and contribute to support long-term growth of the stock market via the development of green products,” he added.

IFC Regional Manager for Vietnam, Cambodia, and Laos Kyle Kelhofer added the agency is looking for opportunity to join Vietnam’s potential green bond market in the coming time.

Kelhofer added the IFC expects green bond would open up opportunities for further fund raising for infrastructure and renewable projects, which are finding it hard to raise funds via traditional financial instruments.

The issuance of green bonds would help accelerate Vietnam’s efforts towards green and sustainable development, said Kelhofer.

A study from Moody’s suggests global issuance of sustainable bonds will hit a record $650 billion in 2021, a 32% increase over the $491 billion issued in 2020. Of the total, US$375 billion would come from green bonds, US$150 billion from social bonds and US$125 billion of sustainability bonds. Sustainability-linked bonds have strong growth potential, as they allow issuers to maintain the flexibility of general corporate purposes borrowing while potentially still appealing to sustainability-minded investors. Meanwhile, governmental policy will further support sustainable debt market growth and development in the year ahead, as governments around the world heighten their focus on climate change and link economic recovery plans with sustainable development goals, stated the rating agency.

A new Law on Land is needed, but it could take a good three years for a new itineration. Photo: Le Toan

According to previous proposals, the Law on Land 2013 was to be revised at some point after the 13th National Party Congress. A new law was to be considered within the year, with the National Assembly able to discuss the revised draft by the end of 2022. If all goes to plan, the revised law would then need at least three years before being approved.

Simultaneously, and with the party congress now in the rear view mirror and a new government in the process of taking the reins, a summary report of the implementation of the 2013 land law is being led by the Ministry of Natural Resources and Environment (MoNRE), involving every ministry and local authority. The summary report will be sent to the government and submitted to the National Assembly in the second quarter of 2023 the latest.

According to Dang Hung Vo, former deputy minister of Natural Resources and Environment, the current Law on Land contains conflicts with many other laws such as those on housing, real estate business, forestry, zoning, and public asset management.

“The overlap among those laws is the main reason for limiting the new supply for the real estate market as demand continuously increases. This leads to rocketing price increases and speculation which makes the market unstable,” Vo said.

Meanwhile, the weakness of the current Law on Land has also created struggles for administrative policies and implementation of land issues, especially in compensation.

Talking with VIR, Lim Hua Tiong, CEO of Frasers Property Vietnam expressed that a revised land law is necessary to enhance the flow of foreign investment to Vietnam – and that means a law with shorter processes, clearer and less complicated regulations, and elimination of conflicts with other laws that would all help investors make faster decisions and open up major chances for their success in Vietnam.

“It must offer equal opportunities for Vietnamese and foreign investors by enabling and granting overseas investors the right to directly obtain land use rights for the purposes of land bank development for new project establishment,” said Lim.

He added that any revised land law should clarify the measurement of public land, which can be directly allocated/leased to the investor without public auction. “This may shorten the time of the land allocation process and project implementation, respectively,” he added.

One official from the MoNRE noted that the revision of the land law must clarify details and remove unfairness for related parties in inheriting profits brought about by investment in land. Especially, the financial framework for land use which includes land leasing rents must be more relevant to the realities of the market.

“Moreover, the current Law on Land fails to mention many new types of real estate products such as condotels, officetels, or shophouses so a revised one is in need to deal with those products,” said the official.

According to Dang Minh Duc, director of Dong Nai Department of Natural Resources and Environment, a new law must take into account the current land status of localities.

“The revised Law on Land should clearly regulate the process of appraisal and land use right auction, and the calculation of the value for land compensation. These issues are seriously impacting the implementation of many projects in Dong Nai province,” Duc said.

The MoNRE has revealed that key issues to be considered in the revised land law include the expansion of quotas for agricultural land use of individuals and households; and management of rice land and especially land collection methods for the development of socio-economy of localities.

Also in the frame for a revamp included are taxation policies on agricultural land provided to households and enterprises that are left unused, as well as how to harmonise the rights between foreign enterprises and the government, while avoiding the impacts to the country’s security but ensuring a solid investment environment for overseas investors.

Lim Hua Tiong – CEO, Frasers Property Vietnam Under the current land law, a foreign-owned entity does not have the right to directly obtain land use rights from other land users. This prevents a foreign-owned entity from developing a land bank for new projects. Within a project area, there are several parcels managed by the state such as land with rivers, streams, canals, springs, and special-use water surface. There has not been any obvious regulation to specify the measurement of public land, which can be directly allocated/leased to the investor without public auction. This prolongs the project land allocation process and adversely affects the investor, as they cannot carry out the next investment steps without such land allocation. For project implementation, developers must go through many complicated steps which can take up two years to fully process. In a real situation, many projects take 3-5 years for legal approval. This prevents developers from market advantages because of delayed launch timelines. Also, the inconsistent application of land use fee calculation is a big trouble for real estate developing, not only for foreign investors but also Vietnamese ones which continues to create many disputes. Peter Dinning – Chairman, Colliers International Vietnam has made tremendous advances within the real estate sector including the rights of ownership and the rights to occupy, but we have seen many examples when land has been taken away at below the market value. This leaves the owner in a worse position than they were in before the land is taken away. Further advances in creating a fair system to value property are required to create a more international-standard real estate market. Real estate in Vietnam is still in its infancy and while it is a driver for the economy, real risks are still associated with owning and occupying land. International investors would like to see a system which protects land and property ownership and in the event that for whatever reason it is taken away, a true open market value is paid by compensation. In the UK we have a dedicated department called the Valuation Office whose duty is to protect the rights of the individual when a property is taken away. There is a proper right to appeal and valuation tribunals are available for anyone who disputes the compensation that a developer and or an authority wishes to pay to take over your land. Alain Cany – Chairman, European Chamber of Commerce in Vietnam European enterprises are keen to invest and expand further their business operations and new projects. To capitalise on this trend, the government could enhance the legal framework and cut administrative procedures on land to unlock the full potential of European investment. For instance, reducing the time to complete the investment registration process would be welcome, as would making the procedures for acquiring land clearer and more transparent. Enabling foreign investors to borrow from international lenders would also be a positive step, rather than limiting mortgages just to banks. We have seen some positive developments in the last few months alone. For instance, Decree No.148/2020/ND-CP – in particular its provisions on land lease for small state-owned land parcels – should help to clear one of the bottlenecks for investors whose developments have been on hold for some time. This, in turn, should restore the land fund for project development and create more opportunities for local and foreign enterprises. We encourage the government to build on this success. For instance, a definition of “foreign-invested enterprises” aligned with the new Law on Investment would be a good step, as current inconsistencies create difficulties.