Hanoi’s sustainable development in limelight

Almost 600 domestic and foreign scientists gathered in Hanoi on Oct. 7 for a three-day international conference, “Sustainable Development of Hanoi Capital - Civilised and Heroic City for Peace”.

At the opening ceremony, Vice Chairwoman of the Hanoi People’s Committee Ngo Thi Thanh Hang said the conference was an importance chance to assess and honour the traditions and civilised values in the glorious history of the capital city and the whole nation.

We should outline orientations and strategies to build Hanoi into a modern, elegant and civilised city, she said.

For his part, Secretary of Hanoi’s Party Committee Pham Quang Nghi pointed out challenges to the capital city that need to be solved such as the fast increase in urban population, traffic jams and environmental pollution.

Meanwhile, planning and planning management have not been well controlled, leading to the degradation or disappearance of the capital’s architectural heritages and unequal development in urban and suburban areas, Nghi said.

There remained shortcomings in the capital city’s economic efficiency and competitiveness while its internal sources and advantages have not been fully tapped, he noted.

The capital’s economic development has failed to match its potential and socio-cultural development has not caught up with the capital’s economic development pace as well as its role and position, he added.

He said the capital city’s authorities considered the conference a chance to listen to scientists’ opinions on the city’s strengths and potential for development. He also hopes participants will put forth proposals on solutions to bring into play the values of Thang Long-Hanoi to build a sustainable development strategy for the city in the context of rapid global change.

At the conference, UNESCO Representative in Vietnam Katherine Muller-Marin cited a recent study that was conducted by PricewaterhouseCoopers and reported in its UK Economic Outlook publication as saying that Hanoi is projected to be one of the world’s top two cities in terms of average real GDP growth for 2008-2025.

In order that the city continue delivering accomplishments such as these, we need to be mindful of the challenges that rapid urbanisation poses, especially when it is about preserving cultural heritage, she said.

“If we wish for sustainable development in the next 10 years, 100 years, and even 1,000 years, we have to preserve the cultural values,” she said.

In his report on “Thang Long-Hanoi: Lasting and Sustainable Development” at the conference, Prof. Dr Vu Minh Giang mentioned four groups of issues that are discussed at the event. They include history and politics; cultural issues; socio-economic issues; and balancing natural resources and environmental conditions with urban management and construction.

A total of 157 reports will be presented at the conference.

Professor, Doctor William S. Logan of Deakin University , Melbourne , Australia , who has studied about Hanoi for 20 years, said Hanoi was one of a few cities in the world having a continuing history of being the capital city of a country for over 1,000 years, which makes it different from many other foreign cities.

Hanoi has to ensure that modern development doesn’t undermine the outstanding universal values if the city wants to maintain its distinctive character as one of the most beautiful and oldest cities in the world.

In his opinion, development and preserving heritages are not opposing issues. As the result, policy makers have to take planning issues into consideration and not destroy the city’s cultural values.

Small-scale condo buildings challenge city’s planning

Just imagine thousands of small private condo buildings – if not many more times that number – are to spring up in the city. And just imagine how the rampant development and the chaotic constructions will spoil the general scenery in HCMC.

That is the highly-probable reality which is a huge challenge for urban planners in the country’s biggest city, as the legal corridor is now opened for owners of land plots of as small as 120 square meters to develop private condo buildings. The legal basis is provided for in Circular 16/2010/TT-BXD, issued by the Ministry of Construction to offer detailed guidelines for implementing Decree 71/2010/ND-CP, and started to take effect last week.

Anyone can build apartments

The circular allows individuals to develop private apartments within existing residential areas in cities around the countries. For the first time, apartments in such mini condo buildings will be granted certificates of ownership and can be transferred like those in large-scale commercial buildings.

For many people, allowing such small-sized apartment development is good news, for it will create chances for them to afford an apartment for their own thanks to the apartments’ low prices. This will also help quench the thirst of housing demand in the society.

However, others feel concern that developing the so-called ‘mini-apartment’ projects in existing residential areas will challenge the city authorities in terms of social management, and even worse, the move will quickly tear down urban planning in a city like HCMC.

The new rules allows families and individual to build an apartment building that has at least two stories, and each story must have two or more apartments measuring from 30 square meters. Those condos have to meet the standard management requirements as specified in the current housing law.

The regulation requires all future private housing buildings that have a total floor area from 1,000 square meters, or from six-story height to have a certificate of construction safety granted by competent management organizations. Once the private housing buildings meet all requirements, which are in fact very simple, they will be offered property ownership certificates for each apartment in the building, and the apartments’ owners are allowed to resell their property to others. Like other commercial condos, the land area on which the private apartment building is developed will be used as common property for every resident living in the building.

Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company, which used to send a petition to develop 20 square meter apartments only to be turned down, comments that the new rules are very interesting and also create a very complicated problem for the city.

“This is interesting because it will bring profits to the society, allowing anyone to develop apartments,” Duc says to the Daily.

Duc says such small-sized apartments will surely be cheaper because developers do not have to spend money on technical and social infrastructure development, nor do they have to pay land use tax as big commercial condo projects do. Moreover, such private buildings often enjoy simple and quick procedures in obtaining a construction permit; sometimes it takes only ten days for a permit granted. Under current construction conditions, it will take only from three to six months to finish such a condo building, meaning the investor will recoup investment quickly and can maximize their profits in a short period of time.

Duc comments that for buyers, the would-be low-cost apartments will meet the demand of the majority of homebuyers who have a meager budget and have no way but live in leased houses or apartments. Thus they can buy those apartments to either meet their accommodation demand or possess a property for their own.

Challenges to management and planning

Seen from the city’s master plan, allowing such private apartment development may lead to chaos in planning, breaking the city planning, says Duc of Dat Lanh Company.

He explains that an existing residential quarter along a small street with hundreds of houses will surely become overloaded if some mini-apartment projects with hundreds of apartments are crammed into the quarter.   

Tran Minh Hoang, board chairman of Vinaland, seconds his colleague’s ideas, saying that giving the green light to such apartment projects will help nothing but pose many challenges to management organizations such as social security and firefighting protection among others.

Hoang says developing such private condos will spoil the city’s relocation plan to develop residential sections in outlying districts. Instead of going out to the outskirts, many will manage to stay in the urban center, accepting to live in a small apartment in return for many conveniences. As a result, the city’s population will face more pressure in the coming time.

In addition, apartment management is a tough problem for private developers, and disputes will arise and are not an easy task to address, even for professional property developers.

In fact, some property developers have recently begun set eye on the ‘fast-food apartment segment’ by selecting some areas in existing residential quarters for their condo development. The advantages of such projects include simpler compensation and site clearance plus the availability of existing infrastructure systems. Meanwhile, developers who risk their investments into big projects have to face prolonged procedure in site clearance and in seeking a license for construction.

With a private apartment, a minimum land area of 120 square meters is enough for a mini-apartment building. An executive officer of a real estate company says he is asking for a license to develop a private apartment project under his own name, not under his company name.

Some property companies, however, show concern whether allowing such 30-square meter apartment development will violate the housing law when those apartments are traded as commercial ones. The current Housing Law requires commercial apartments to be at least from 45 square meters each.

A hard role to uphold

The Vietnamese prime minister at the opening session on Wednesday of the National Assembly put the partial blame on the Government and relevant ministries for the collapse of the country’s shipbuilding giant Vinashin.

An 18-page report on the Vinashin debacle sent to lawmakers who are attending the year-end meeting of the legislature reveals the Government was fooled by Vinashin leaders. In many instances, Vinashin’s top management sent to the Government the debt-laden company’s reports that had been falsified to bloat earnings.

Vinashin is part of the broader picture about the problematic management of state-owned enterprises, particularly conglomerates and corporations.

“The role of the state as an administrator and an owner at state-owned enterprises in general and conglomerates in particular has exposed problems and failed to catch up with changes in a market economy,” says a National Assembly Economic Committee review of the Government report on social and economic performance. “Mechanisms for scrutinizing, supervising, auditing and managing corporate finance have proved to be inefficient.”

The state corporate sector has got a lot of handsome privileges from the Government, such as easy and cheap access to capital and resources like land and minerals, which are still a far-fetched dream for the non-state sector that consists of local private and foreign-invested firms.

With such favorable treatment, state-owned enterprises should have led the charge on the country’s development front as had long been desired by the authorities. Surprisingly, however, the state sector has had the lowest growth rate and created the lowest number of jobs, according to Saigon Tiep Thi newspaper.

The paper quotes statistics as indicating that the state corporate sector’s ICOR (Incremental Capital Output Ratio) – the extra capital needed to increase one unit of output – has kept rising over the years, now at between 8 and 14. Meanwhile, the private sector with limited incentives from the Government has proved to be more efficient with the ICOR index ranging from 3 to 5, and thus contributed significantly to the nation’s growth.

Nguyen Quang A, a high-profile economist, says half the total amount of investment in the economy is sucked into the state corporate sector. But this sector’s contributions to the economy have been largely insignificant despite the huge investment being funneled into state firms by the Government. What’s more, they have been steadily falling over the years.

Vu Thanh Tu Anh, director of research at the Fulbright Economics Teaching Program in HCMC, says in an article published in Thoi bao Kinh Te Saigon of Saigon Times Group this week that state-owned enterprisers generated 30% of GDP in 2001-2005 but the ratio dipped to 28% in 2006-2009.

Their contributions to GDP growth plunged from 33% in 2001-2005 to 19% in 2006-2009, Anh says, because the state corporate sector’s GDP growth slowed down from 7.6% to 4%, half the percentage achieved by the private sector.

The state corporate sector workforce has also declined over time. A survey by the General Statistics Office shows the combined workforce of state-owned businesses slid from 44% in 2001-2005 to 24% in 2006-2008, Anh says, adding that even worse, massive layoffs happened at these companies with new job creations dropping from minus 4% to minus 22% in the corresponding periods.

The role of this sector in the manufacturing industry has also tapered off though the Government has taken a vision to steer Vietnam toward an industrialized economy by 2020. “If we look at industrial production, a focus of Vietnam’s industrialization strategy, state-owned enterprises have a very humble role,” Anh says. “In 1995, the proportions of industrial production value in the state and private sectors were equal but changed to 20%-80% in 2009.”

The picture about the state corporate sector is pretty clear now. It has failed to live up to expectations that it leads the economy. Resources should have been channeled into where efficiency of capital use is greater, more jobs are generated, and productivity is higher.

Another high-profile economist, Le Dang Doanh, has cast doubt over the lead role of state-owned companies. Speaking to Tien Phong newspaper late last month, he proposed the phrase “The state economic sector upholds the lead role” be removed from the draft document to be presented at the National Party Congress slated for January next year.

Sticking to this ideal is stirring up controversy, especially at a time when Vinashin remains a hot-button issue, he says, and Vietnam needs real conglomerates, not those technically merged via administrative decisions.

The state has kept insisting on championing a level playing field for all, so it is a paradox to emphasize the lead role of the state corporate sector only, he says.

Meanwhile, an editorial of Thoi bao Kinh te Saigon suggests putting an emphasis on the role of the state in macro-economic policymaking rather than the lead role of state firms. The rationale of this suggestion is that in the aftermath of the global financial crisis, developed economies have acknowledged the important role of the state in economic regulation and control and in coping with market shortcomings to reduce market volatility bred by greed or asymmetric information.

“It is the state that, through tools such as taxes and investment incentives, can orient businesses in all sectors toward the fields that most benefit the economy,” says the editorial.