New policy to attract investment

The Ministry of Construction has submitted to the Government the proposal to allow foreigners to buy houses in Vietnam, and if it is approved, the proposal will be realized in early 2008.

Statistics show that in 2004-2006, more than 81,000 foreigners came to Vietnam for business, work or study purposes. Of those, 25,000 foreigners came to carry out investment projects, 1,699 to work in diplomatic missions of foreign countries and international organizations in Vietnam, and more than 54,000 to work in the fields of health, education, culture and sports.

Through its surveys, the Ministry of Construction found that most of the above foreigners have rent houses in Vietnam and the leases are mostly for 3-5 years. In Hanoi, prices are US$1,400-2,000 per month (houses built with foreign investment), and US$700-1,000 per apartment per month (houses built with domestic investment). In Ho Chi Minh City, the rents on apartments are US$800-1,000 per month, and for villas US$3,000-4,000 per month. Nguyen Manh Ha, the director of the Housing Management Department of the Ministry of Construction said, "With such rental prices, foreigners have to pay approximately US$50,000 on accommodations to live in Vietnam for five years. If foreigners are allowed to buy houses in Vietnam, they will be able to save a considerable amount of expenses on accommodation. Moreover, living in the house of their own will make foreigners feel more comfortable and convenient."

However, not every foreigner in Vietnam is allowed to buy a house here. The Ministry of Construction estimates that only about 21,000 out of the total 81,000 foreigners will be eligible to buy and own houses in Vietnam. Those foreigners that have direct investment in Vietnam, the ones that have received orders/medals from the Vietnamese. President/Government for their contributions to Vietnam, and cultural activists, will be allowed to buy a house in Vietnam. The foreigners that will be allowed to buy houses in Vietnam must be the ones who are allowed to live in Vietnam for at least one year, who are working in Vietnam and are not involved in any crime. Foreigners will be allowed to buy houses for the only use as the residence for themselves and their families. And before they buy a house, foreigners will have to apply for a license from relevant housing management authorities at the central level.

The Ministry of Construction has also asked the Government to allow foreigners to own houses and use land for residential purposes for 50 years. "After the 50-year time limit is over and if the license is not extended, foreigners will have to sell the house/land to others," Mr. Ha said. The Ministry of Construction supports the opinion that each foreigner is allowed to own only one house and has the right to sell, mortgage, present and give it to somebody as inheritance but not to sublease it.

To attract more investment

Commenting on the proposal of the Ministry of Construction, Dr. Tran Dinh Thien, the deputy director of the Vietnam Institute of Economics, said that allowing foreigners to buy houses in Vietnam is a need because it will help Vietnam attract more investment in the future.
Mr. Thien thinks that if foreigners have to hire a house they will feel that their accommodation is unstable and cannot give their whole mind to their business. Moreover, the rent of accommodation is not cheap. Foreigners will be able to save a considerable amount of money if they are allowed to buy houses in Vietnam.

At present, only 21,000 out of the total 81,000 foreigners in Vietnam are eligibleto be allowed to buy houses in Vietnam. In the opinion of Mr. Thien, existing regulations in Vietnam still have many gaps that create favorable conditions for the speculation of real estate to spread. With such regulations, the Vietnamese investment environment will be less attractive to foreign investors.

Housing for Viet Kieu: A lesson

Richard Leech, the managing director of the CBRE Real Estate Consulting and Management Company in Vietnam, said that several years ago, Vietnam began to apply a policy allowing Viet Kieu (overseas Vietnamese) to buy houses in Vietnam but the implementation of that policy has been very slow. And he is afraid that the policy to allow foreigners to buy houses in Vietnam will fall into the same situation.

In 2001, the Government promulgated Decree 81/2001/ND-CP allowing four types of Viet Kieu to buy houses in Vietnam. However, the Ministry of Construction said that so far only about 100 Viet Kieu have bought houses in Vietnam (70 in Ho Chi Minh City and none in Hanoi).

In 2006 the Housing Law was amended increasing the range of Viet Kieu that are allowed to buy houses in Vietnam. More than one year has passed since the amended law came into effect but no more Viet Kieu bought a house. Meanwhile, the National Committee for Overseas Vietnamese estimates that about 100,000 Viet Kieu want to buy houses in Vietnam. Nguyen Manh Ha said that Decree 81/CP does not indicate clearly which State authority is responsible to confirm that someone is really a Viet Kieu and is eligible to be allowed to buy a house in Vietnam. Because of that, the administrations of many localities have not dared to approve any Viet Kieu's application for the permission to buy a house in Vietnam.

Mr. Ha said that the Ministry of Foreign Affairs and the Ministry of Public Security have not promulgated any document to provide guidelines for identifying the time Viet Kieu reside in Vietnam, based on which a visa can be granted to Viet Kieu. And he is afraid that the same situation will happen to the policy to allow foreigners to buy houses in Vietnam. Nguyen Manh Ha said, "With the experience drawn from the policy to allow Viet Kieu to buy houses in Vietnam, we will make everything clear in the decree to guide the implementation of the policy to allow foreigners to buy houses in Vietnam, of course, if that policy is approved by the Government." So, when they apply for the permission to buy a house in Vietnam, foreigners will have to enclose their applications with some kinds of papers, including passports, investment certificates, invitation letters (from Vietnamese authorities), confirmation on the duration of their residence in Vietnam (made by the Vietnamese side).

Source: Vneconomy