Privatization of low income housing provisioning in hochiminh city, vietnam

PRIVATIZATION OF LOW-INCOME HOUSING PROVISIONING IN HOCHIMINH CITY, VIETNAM By Nguyen Thi Phuong Chau A thesis final submitted in fulfillment of the requirements for the degree of Master of Science Examination Committee Dr Edsel E Sajor (Chairperson) Dr Vilas Nitivattananon (Co-chairperson) Dr Huynh Trung Luong (Committee Member) Nationality: Previous Degrees: Vietnamese Bachelor of Economic Geography (University of Social Sciences of Humanities, HCMC, Vietnam) Scholarship Donor Government of Canada (CIDA) Asian Institute of Technology School of Environment, Resources and development Thailand April 2006 Acknowledgement During the time I study and my research at AIT, I have received many supports form many people whose I would like to express my thankfulness in print Firstly, I would like to express my deep gratitude to my study advisor, Dr Edsel E Sajor, for his enthusiastic support, strict and invaluable comments, and encouragement throughout the period of my thesis at the Asian Institute of Technology I would like to sincerely thank to Dr Vilas Nitivattananon, my committee’s co-chairman, whose kindness and enthusiasm to support me during the study time and give the strictly comments for my thesis I also would like to sincerely thank to Dr Huynh Trung Luong, as my committee member, who has contributed valuable suggestions in conducting this thesis Sincere appreciation is also extended to all organizations in Hochiminh City for providing precious information Firstly, I would like to give thanks to Mr Tran Van Vien, deputy chief of Standing Board of the Steering Committee for Urban Upgrading Projects of the Cadastry and Housing Land Department, and Mr Pham Dang Ho, deputy of low income housing program of the Construction Department, who have provided much helpful and practical information for my thesis Without the kind cooperation and support of these persons and organizations, my thesis would not have succeeded Especially, I would like to thank Mr Le Thanh Vinh, the chief of Investment and Planning Office of Nam Long Construction Company, and Mr Ngoc, the chief of Housing Business Office of Him Lam Construction Company, and the M&C Holding Corporation members, who have provided the practical information as well as their problems in sharing the government’s responsibilities in the field of low income housing development I would like to thank Mr Pham Gia Tran and Mrs Truong Thi Kim Chuyen, my teachers and my collegues, who have always supported me during the thesis progress I also would like to give the appreciation to my collegues who have enthusiastically helped for my data collection And I very specially thank to my special friend, Mr Le Thanh Hoa, who has supported and encouraged me during the time I have studied in the Asian Institute of Technology I am indebted to the Canadian International Development Association (CIDA) for providing my scholarship grant and the financial assistance to undertake this study Finally, I would like to express my deepest gratitude to my beloved family for giving me encouragement and the strength to overcome all obstacles throughout my life Abstract The urbanization and industrialization are the causations of population growth due to migration in HCMC Housing shortage is still the big problem for the majority of low income people Public sector has tried to increase the housing stock, their housing services are small volume, low quality and no housing management Private sector’s role is still limited, though; their low income housing services are more productive, better quality and good housing management By the mix of qualitative and quantitative methods, this study describes, compares and analyzes the public and private sectors’ roles and their relationships in efforts of promoting low income housing It is argued that private sector could provide the better housing service and fill the gap of housing shortage for low income people Their co-operations could raise the capital investment and gather resources to develop Because the weak role of government on urban planning and land and housing management, private sector was hardly to access the high price and scarce land resource Government intervention by supporting private sector to access land and provide low income housing was unattractiveness Land resource is the main factor for developing low income housing Land price is determinant to private sector’s ability in land access Government commitment is important to establish the low income housing market and encourage private sector for their greater role in low income housing provisioning Key words: Privatization, private sector, public sector, housing shortage, low income housing building, government intervention, etc ii Table of Contents Chapter Title Page Title Page Acknowledgement Abstract Table of contents List of Tables List of Figures List of Maps List of Abbreviations Introduction 1.1 Background 1.2 Privatization in low income housing programs in HCMC 1.3 Statement of the research problem 1.4 Rationale 1.5 Research questions 1.6 Research objectives 1.7 Scope and limitation 1.8 Summary Literature Review 2.1 The low income housing in less and developing countries 2.2 Privatization in low income housing provisioning 2.3 Constraints of private sector in low income housing provisioning 2.4 Government’s intervention in low income housing 2.6 Summary Research methodology 3.1 Type of research 3.2 Study area 3.3 Data collection 3.4 Data analysis 3.5 Summary The housing shortage and the role of public and private sector in low income housing in HCMC 4.1 Housing shortage in HCMC 4.2 Public sector in Low income housing provisioning 4.3 Characteristics of private sector in current low income housing situation 4.4 Relationship between the private sector and public sector in low iii i ii iii iv vi vii viii ix 1 3 4 5 10 12 13 15 15 15 16 18 19 20 20 25 27 28 income housing provisioning 4.5 Summary Public and private sectors in low-income housing provisioning 5.1 Conditions for private sector in low income housing provisioning 5.2 Public and Private sector in low-income housing provisioning 5.3 The comparison between the low income housing services of private and public sector in the low income housing projects in HCMC 5.4 The lack extent of the private sector’s low income housing services 5.5 Summary Constraints in low income housing provisioning of the private sector in HCMC 6.1 Land constraints 6.2 Policy constraints 6.3 Procedure constraints 6.4 Summary Conclusions and recommendations 7.1 Findings 7.2 Recommendations 7.3 Further study References Appendixes Appendix 1: Maps on land price (per square meter) in HCMC Appendix 2: Interview guide for In-depth Interview in study area Appendix 3: Guideline for the observations in study area Appendix 4: Interview guideline for the key informants (households) Appendix 5: Questionnaire form for low-income households Appendix 6: Questionnaire form for households without home iv 29 31 31 33 38 49 50 51 51 61 62 63 64 64 65 66 67 76 79 83 84 85 88 List of Tables Table Title Page Selected housing descriptors of low income people, aged from 24 to 52, in 4.1 24 Ward of District 8, HCM 5.1 The satisfaction of low income people about physical quality and building 40 infrastructure in the housing services of public and private sectors 5.2 The satisfaction of low income people about social infrastructure in the 42 housing services of public and private sector 5.3 The types of housing payment and the satisfaction of housing price 43 between the private and public housing 6.1 Land price set by government and land price established by the real 58 market in HCMC during 10 years, from 1996 to 2005 v List of Figures Figure Title 5.1 5.2 5.3 5.4 5.5 6.1 6.2 Page The design area of Him Lam Residential Area Project The low income housing project of M&C Holding Corporation in Ward of District 8, HCMC The physical housing services in Him Lam and Xom Dam buildings The technical and social infrastructures in Him Lam and Xom Dam projects The low income housing patterns of the M&C Holding’s buildings and the low income housing building of Binh Dang building The HCMC government and Real Market land prices in 1996, 2000, and 2005 The average land prices of HCMC between the HCMC government price and the real land market price in 1996-2006 The technical and social infrastructures in Him Lam and Xom Dam projects vi 34 36 45 48 56 60 List of Maps Map Title 3.1 A1 A2 A3 A4 A5 A6 Study area (HCMC) and Special study area (District 8) Map of the government land price in 1996 Page Map of the real market land price in 1996 Map of the government land price in 2000 Map of the real market land price in 2000 Map of the government land price in 2005 Map of the real market land price in 2005 vii 16 76 76 77 77 78 78 List of Abbreviations ACB BIDV DOC EPZs GDP GHB HCMC HHB HIFU HQS HUD ICB IHB Izs Km2 m2 MOC MHB NHA SBV SOH VBARD Vietcombank VND USD : Asian Commercial Bank : Bank for Investment and Development of Vietnam : Department of Construction : Export Processing Zones : Gross Domestic Product : Government Housing Bank : Hochiminh City : Hochiminh City Housing Bank : Hochiminh City Investment Fund for Urban Development : Housing Quality Standard : Housing and Urban Development : Industrial and Commercial Bank of Vietnam : Investment and Development Bank : Industrial Zones : Square kilometer : Square meter : Ministry of Construction : Mekong Delta Housing Bank : National Housing Agency : State Bank of Vietnam : Statistical Official of HCMC : Vietnam Bank for Agriculture and Rural Development Bank : Bank for Foreign Trade of Vietnam : Vietnam Dong : United State Dollar viii Chapter Introduction This chapter gives an initial overview of the study It discusses the brief information of Hochiminh City and introduction to the privatization in low income housing in Hochiminh City (HCMC) Based on this research situation, the knowledge gap is identified as the reason to carry out this study Research questions and objectives are stated as the skeleton for the study Scope and limitation of the study is also noted 1.1 Background Urbanization and industrialization cause the population growth in urban areas and lead the housing problem in many developing countries (Sajor, 2003; Yap, 1992b; Goldblum and Wong, 2000; Setchell, 1995; Vincent and Joseph, 2001) Though government’s efforts in raising the housing stock, it cannot respond to the housing demand Many studies in developing countries showed the private sector is very important in housing development, especially in low income housing Government has shifted their role to private sector (Pugh, 1994; ADB, 2000; Yap, 1989, 1992b; Robert and Jan, 1992), socall privatization in low income housing development In HCMC, it is the same situation (World Bank, 2001; Chuyen and Tran, 1997; Lanh, 2000; French Embassy, 2003) However, the transition in housing development has been done since 1986 But in low income housing, this transition is still the big concern to the government (Huong, 2000; Lanh, 2000) 1.2 Privatization in Low Income Housing Programs in HCMC Decentralization in housing development increased the significant amount of housing in HCMC Through decentralization, City government in housing construction is reduced and focused on establishing the legal framework for land and housing market The various investments are attracted to build the houses The government provides lands and infrastructures and tax system to encourage private sectors, individuals and organizations to develop housing In the low income housing programs, private sector has free tax of land using to construct housing for the poor and the low income people (IUTD and NRI 1999) The private housing development companies are rapidly increased in this period However, most of private construction companies are served for middle- and high-income people (Huong, 2000) By 2001, City government has tried to improve the housing policies in Decree 71/2001/ND-CP1 to attract private investment building the houses for low income people2 This Decree was issued on October 1, 2001 by the Prime Minister about “Prioritization in Housing Building for Selling and Renting” The Ministry of Labor, War invalids and Social Affairs (MOLISA) had announced the margin of poverty in the period of 2001-2005 that the average poverty threshold in urban areas is 150,000 VND/person/month (equal to 9.5 USD/person/month, evarage price of 2004 by Tuoitre Newspapers) But the HCMC Department of Labor, War invalids and Social Affairs (HCMC DOLISA) set the household monthly income levels as follows: the very poor people with less than 250,000 VND; the poor people (also low Yap K.S (1996) Low Income Housing in a Rapidly Expanding Urban Economy The Third World Planning Review, 18 (3): 307-323 Yap K.S (1989) Some Low Income Housing Delivery Subsystem in Bangkok, Thailand Environment and Urbanization, (2): 27-37 75 Appendix 1: Maps on land price (per square meter) in HCMC Map A 1: The government land price in 1996 Map A 2: The real market land price in 1996 76 Map A 3: The government land price in 2000 Map A 4: The real market land price in 2000 77 Map A 5: The government land price in 2005 Map A 6: The real market land price in 2005 Source of the above maps: mapping from the above land price data Source of land price: Government land price: Chau(1994) and HCMC Government website; Newspapers of Thanhnien, Tuoitre, Saigon Giaiphong, Mua&ban: real market land prices (19962005) 78 Appendix 2: Interview guide for In-depth Interview in study area Type 1: Directors or managers of private companies Data Details Background information (for Q1 & Q3) - Private sector’s characteristics (name, location, types of function, capital investment, annual/monthly income, etc.) - Their fields of interest in housing sector Their provisioning in low-income housing (for Q1, Q2 & Q3) - Their current housing and low-income housing provisioning (supply for demand, and how many projects they have provided) - When and how they started providing low-income housing - Reason why they decided to go into this - What types of low-income housing they have provided (lowrise buildings, high rise building, etc.) - What characteristics of those low-income housing they have provided (for what kinds of low-income people, prices of houses, size of houses, positions, etc.) - What kind of housing is suitable for low-income housing (about prices, sizes, positions in the building, etc.) - What kind of low-income housing services they have provided (types of payment, time of maintenance, etc.) - How they maintain and management their services after construction Their ability in lowincome housing investment (for Q2 & Q3) - What problems that they cannot supply more low-income housing (land price, finance, building materials, workers, etc.) - What types of relationship between them and public sector They co-operate to public sector in what ways (pure private sector, co-investment, joint venture with beneficiaries, construction, contract-out service, etc.) - Which are good types of co-operations and the reason why - What they receive from government to provide low-income housing (policy, support, subsidy, etc.) - What problems with government policy that they cannot supply more low-income housing (land taxes, materials tax, investment and construction procedures, planning information, etc.) Their relationship with public sectors and among private sectors (for Q2 & Q3) - How they work with public companies (in sharing market, resources, function, cooperation, etc.) Any problems and constraints - What relationship or cooperation with public companies is good for them - What and how the public agencies deal with them (planning information, law and regulation, monitoring, etc.) Any problems and constraints 79 - What kinds of their interest and responsibility to the government (profit, priority, responsibility in construction, maintenance, and management) - How they deal with the state banks (loans and micro-credit) - Is there any co-operation among private sectors (among private companies, or among private companies and commercial banks) - How they, private sectors, cooperate among themselves to share benefits in this field Any problems and constraints - The reason why they cooperate into this fields - Their thinking about this cooperation in the future - Their behavior or attitude in their service quality (compare to the public services) - Their thinking about providing more low-income housing in future (their investment, co-operation with public or private sectors, etc.) Government intervention on their low-income housing provisioning Type 2: - Whether government truly support them in low-income housing providing (land and housing laws and regulations, financial system, tax system, etc.) - Their thinking on future government intervention for their lowincome housing providing Directors or managers of public companies Data Details Background information (for Q1 & Q2) - Public sector’s characteristics (name, location, types of function, capital investment, annual/monthly income, etc.) - Their role and responsibility in low-income housing development programs Their provisioning in low-income housing (for Q1 & Q2) - Their current housing and low-income housing provisioning (supply for demand, and how many projects they have provided) - When and how they started providing low-income housing - What types of low-income housing they have provided (lowrise buildings, high rise building, etc.) - What characteristics of those low-income housing they have provided (for what kinds of low-income people, prices of houses, size of houses, positions, etc.) - What kind of housing is suitable for low-income housing (about prices, sizes, positions in the building, etc.) - What kind of low-income housing services they have provided (types of payment, time of maintenance, etc.) - How they maintain and management their services after construction Their ability in lowincome housing - What types of co-operation between them and private sector (pure public sector, public support for private consumption and 80 investment (for Q1, Q2 & Q3) provision, joint venture with beneficiaries, etc.) - Which are good types of co-operations and the reason why - What problems that they cannot supply more low-income housing (land and housing market, financial resource, grant support, building materials, human resources, etc.) Their relationship with private sectors (for Q2 & Q3) - How they work with private companies (in sharing market, resources, function, cooperation, etc.) Any problems and constraints - What relationship or cooperation with private companies is good for them - Their behavior or attitude in their service quality (compare to the private services) - Their thinking about providing more low-income housing in future (investment, co-operation with private sectors, etc.) Government intervention on their low-income housing provisioning - Their thinking on future government intervention for their lowincome housing providing (in their special role of low-income housing development, in sharing market with private sector, grant support, human development, etc.) Type 3: City/District housing development directors or managers Data Details Background information (for Q1 & Q2) - Their duty and responsibility in low-income housing development programs (position, field of management, and responsibilities.) Their information in low-income housing (for Q1, Q2 & Q3) - The current low-income housing provisioning in City/District (supply and demand, when it started, and how many projects provided, ranks of those investment) Any problems and constraints - What characteristics of those low-income housing in City/District built (for what kinds of low-income people, prices of houses, size of houses, positions, etc.) - What kind of housing is suitable for low-income housing for the present and in the future (about prices, sizes, positions in the building, location, social services, etc.) Their information in ability of public and private sectors and their relationship in low-income housing provisioning (for Q1, Q2 & Q3) - The roles of public and private sectors in low-income housing provisioning (public agencies, public companies, and private companies.) - What types of co-operation between public and private sectors (pure public sector, public support for private consumption and provision, joint venture with beneficiaries, pure private sector, contract-out services, etc.) - Which are effective modals of co-operations and the reason why - What problems that public sectors cannot supply more lowincome housing (land and housing market, financial resource, 81 - - Government intervention on their low-income housing provisioning grant support, building materials, human resources, etc.) What problems that private sectors cannot supply more lowincome housing (land price, building materials, laws and regulations, financial and tax systems, etc.) What and how the public agencies deal with them (planning information, law and regulation, monitoring, etc.) Any problems and constraints Their thinking about public and private service qualities Their thinking about the roles of public and private sectors in providing more low-income housing - Their thinking on future government intervention for public sector’s low-income housing providing (in their special role of low-income housing development, in co-operation with private sector, grant support, human development, etc.) - Their thinking on future government intervention for private sector’s low-income housing providing (in increasing housing fund, their kinds of co-operations, their better services, etc.) 82 Appendix 3: Guideline for the observations in study area Data Housing conditions Details - Outside living conditions - Size of housing Sanitation condition (toilet and water supply) Construction materials Greenery and open space Public areas (parking, stairs, alleys, corridors, etc.) 83 Appendix 4: Interview guideline for the key informants (households) in study area Data Details Low-income households’ characteristics - Types of households (official civil servants, privilege families, newly weds, workers in all economic sectors, etc.) - Inhabitant (city resident, migrant, etc.) - Job - Income Housing characteristics - Housing conditions - Size of housing - Sanitation condition (toilet and water supply) - Construction materials (foundation of house, wall, ceiling, etc.) - Housing living conditions (basic infrastructure of services) Outside living conditions - Greenery and open space (public park, trees, etc.) - Public areas (parking, stairs/elevator, alleys, corridors, etc.) Price of housing services - Price of housing (depends on size of housing, position of housing, and open space) Type of housing investment (public or private sector) Type of housing (low-rise building, high-rise building) Year of construction Housing positions (rank of floor, position on the floor) 84 Appendix 5: Questionnaire form for low-income households in study area Questionnaire no: …………………………… Surveyed area: ……………………………… Name of interviewer: ……………………… Date: ………………… ……… Household’s address: … ……… Name of interviewee: … ……… Introduction In many decades, housing condition has been the big concern in most of developing countries because it is one of the most important needs of human beings Especially, in big cities, there have been so many people living and working in day and night Because of financial deficit, public sector seems not to be affordable to supply the urban housing demand So, private sector, as the role of filling this gap of urban housing shortage, tries to supply more affordable housing for low-income people We conduct this study for more understanding about low-income housing conditions in Hochiminh City Our purpose is to contribute to the knowledge, which will be the foundation for decision-makers to adopt some improvement programs and suitable policies related to privatization in urban low-income housing provisioning We highly appreciate your co-operation and believe that the result of this study will, directly or indirectly, benefit you all Š -Background information Are you permanent resident of Hochiminh city? a Yes … b No … How old are you? ………………………… years old What is your marital status? a Married … b Single … c Widowed … d Other, (please specify): ………………………… … How long have you lived here? ………………………… years How many members does your family have? ………………… persons What is your household’s occupation? a Official civil servant … b Privilege families … c Military official … d Police person … e Newly wed … f Worker … g Others, please specify: ……………………………………………………… What is your household’s monthly income? ………………………… VND/month Data related to your housing characteristics What type of housing investor? a Public investor … b Private investor … How many floors are there in yours apartment building? …………………….floors 85 10 How many years is this building? …………………….years 11 What is your housing position? a Rank of floor: …………… b Position on that floor: At the corner … In the middle … Near the stairs … Others, please specify: ………………………… Data related to your housing conditions 12 What is the total area of your house? …………………m2 13 Is that area suitable to your family? a Yes … b No … If yes, please why: …………………………………………………………… If no, please why: …………………………………………………………… 14 Please describe the construction materials in your house: Part of house Kind of materials State of materials (please specify) Good Moderate Bad a Foundation … … … b Walls … … … c Ceiling … … … 15 Please describe your household’s living conditions Infrastructure services State of services Please specify why Good Moderate Bad - Flat toilet … … … - Toilet seat … … … b Water drainage … … … - Tap-water … … … - Drill water … … … - Other, please specify:…… … … … d Electricity … … … e Natural lighting … … … a Toilet: c Water supply: Data related to your outside living conditions 16 Please describe your house’s outside living conditions: 86 State Satisfaction Yes No Enough Not enough a Greenery … … … … b Open space … … … … c Parking area … … … … d Elevator … … … … e Stairs … … … … f Alley … … … … g Corridor … … … … Please, specify why Data related to your house of price 17 How much did you pay for your house? ……………………………million VND 18 Do you think that price is affordable price? a Yes … b No … 19 How did you pay to buy this house? (What kind of payment did you have? And How did you pay?) Terms of payment Ways of payment By cash By credit By loans Other, please specify: ………… 87 Appendix 6: Questionnaire form for low-income households who are in house renting or house sharing (Focus in District 8, HCMC) Questionnaire no: …………………………… Surveyed area: ……………………………… Name of interviewer: ……………………… Date:…………………………… Household’s address:…………… Name of interviewee: ………… Introduction In many decades, housing condition has been the big concern in most of developing countries because it is one of the most important needs of human beings Especially, in big cities, there have been so many people living and working in day and night Because of financial deficit, public sector seems not to be affordable to supply the urban housing demand So, private sector, as the role of filling this gap of urban housing shortage, tries to supply more affordable housing for low-income people We conduct this study for more understanding about low-income housing conditions in Hochiminh City Our purpose is to contribute to the knowledge, which will be the foundation for decision-makers to adopt some improvement programs and suitable policies related to privatization in urban low-income housing provisioning We highly appreciate your co-operation and believe that the result of this study will, directly or indirectly, benefit you all Š -Size of family How many people in your household? …………………………… Person Occupation What is your family members’ occupation? Please detail in the following table: No Householder’s relationship Age Education’s grade Occupation Income (VND) Householder Family’s income How much is your family’s monthly combined-a-family income? … dong/month How much is your family’s monthly average expenditure? ………… dong/month 88 The current accommodation What is your family’s current accommodation? … a Of landlord … b Of relatives (parents, brothers, sisters, other relatives) … c Other, please specify: ………………… What is the size (floor area)? ……………………… m2 What is your satisfaction level in your present accommodation? … a Very satisfied … b Satisfied … c Neutral … d Dissatisfied … e Very dissatisfied The future accommodation If you have an option, you want to own a house immediately? … a Yes … b No What is size of your future house? ……………………… m2 10 What is your biggest constraint in buying a house immediately? … a Total price is too expensive … b Location is not convenient … c Terms of payment not convenient … d Others, please specify: ………………………………………………… Affordable paying 11 How much that you can pay for the new house? ……………………… dong 12 What type of paying that you can afford to pay? … a Installment payment in 5-10 years … b Installment payment in 10-20 years … c Pay 30-50% then loan in 5-10 years … d Pay 30-50% then loan in 10-20 years … e Pay 50-70% then loan in 5-10 years … f Pay 50-70% then loan in 10-20 years … g Other, please specify: ………………………………………………… Š -Thank you for your co-operation! 89