Ho C hi Minh City, Vietnam
RENOVATION IN HOUSING FOR LOW INCOME EARNERS IN HCMC BY NGUYEN MINH HOA, PHUNG HAI DANG, NGUYEN HAI NGUYEN, LE CHI TAM, HOANG DUNG
INTRODUCTION Like many cities of developing countries in Asia, HCMC’s housing supply is seriously inadequate, with low income households bearing the brunt of the impact. In HCMC, low income households include minimum wage and salary earners (such as medium- or low-ranking State workers) and the urban poor (such as vendors, and day laborers). Average incomes for these groups may be as low as 1.5 USD - 2 USD/ day- at or only slightly above the poverty line. ere is a huge demand for low-cost apartments but the prices of such homes are still way beyond the nancial capability of most homebuyers. As a result, approximately 800,000 people (10% of city population) are without a home of their own, and live in substandard rental housing. A decade ago, slums were commonplace despite the efforts of the central government to alleviate the situation. Although the HCMC authority recognizes the challenge and has established a housing fund to rehabilitate existing homes, the
bene ts have been relatively limited. Unlike other cities in Asia, progress is hampered in HCMC by an obsolete ideology-based regulatory framework that constrains private sector participation. Until recently, private land ownership did not officially exist in Vietnam, so that the housing ‘market’ operated informally and outside the law. Lacking clear Party guidelines, government agencies at national level were reluctant to take the radical changes needed to address the mounting housing problems. However, since 1975 the private sector has been granted more freedom to operate in HCMC as a ‘regulated market economy’. As a consequence, innovative reforms and renovation policies launched in HCMC across many domains have tended to exert strong in uence on national policy. In the case of housing, the private sector
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Ho C hi Minh City, Vietnam
Table: Apartment size preference by occupation (100 respondents per group)
Occupation Manufacturing workers
32 m2 31%
40 m2 42%
50 m2 13%
60 m2 2%
> 80 m2 0%
No answer 12%
29% 11% 0% 8% 25% 42% 146 20.85
22% 23% 5% 33% 33% 31% 209 20.85
21% 37% 12% 35% 27% 5% 150 21.43
5% 22% 52% 15% 8% 0% 104 14.85
3% 7% 27% 9% 2 0% 48 6.86
0% 0% 4% 0% 5% 22% 43 6.14
State employees Local company employees Foreign employees University instructors Health employees Day laborers Total valid respondents % / 700 Source: Nguyen Minh Hoa (2000)
in HCMC was especially active, and its initiatives in housing have not only assisted the city government in addressing the housing issue but also impact general housing policy. In 2006 several private companies launched an innovative initiative to help ease the housing supply shortage. is urban housing innovation aims to reduce prices of low-income housing by changing the design of new-build apartments. Past attempts at cost reduction had led to unacceptable compromises in build quality, safety, and amenities. Many such ‘low-cost’ properties quickly deteriorated and were abandoned. Two major private developers headquartered in HCMC (Southern Dragon Ltd. and Dat Lanh) changed this situation with their innovation in affordable housing for low income households. Following discussions with researchers in HCMC and eld trips to the Philippines, Malaysia, and South Korea, the two companies 2
reduced the minimum apartment size below the stipulated 60m2, arguing that this was too large for small families. A survey of apartment size preference (see table below) conrmed this view, showing that that the majority of state employees, manufacturing workers, university instructors and health employees chose apartments of 30-40 m2 in order to fit their budgets. With monthly rentals at an average of 2 million VND (or 100 USD), representing 30% of monthly household income, house ownership is nancially preferable. e demand for small houses and apartments is high in the city. Starting in 2007, the developers and their design consultants explored different ways to reduce construction cost without compromising build quality. Southern Dragon Ltd. was the first to construct apartments under the new speci cations. is rst
building was named “E-Home” (with “E” standing for economy, ecology and efficiency). It comprised 3 blocks of 8-storey buildings located in Phước Long Ward, District 9 of HCMC. e buildings provided a total of 480 apartments valued at 500-600 million VND. Dat Lanh, another national developer, launched a similar project, with to apartment buildings with 10 stories each, totaling 240 apartments. e two companies implemented careful changes to reduce apartment sizes to 32-36 m2 in keeping with real demand The apartments comprise one bedroom of 14 m2, a main room for living, dining, and cooking (14m2), and the remaining 8m2 for toilet and laundry. Ceiling height was raised, allowing a wooden mezzanine to be added that could be used for storage or as an extra bedroom. is use of lightweight materials to increase the overall oor area does not damage the structure nor increase total build-
Ho C hi Minh City, Vietnam
ing weight. e size reduction reduced the apartment price by 35% compared to an apartment of 60 m2, making them affordable for lower income households. In terms of positioning, the two companies have demonstrated agility in responding to the fast-changing socio-economic and regulatory context. However, despite the fact that a large group of stakeholders including the city government found the initiative bene cial, the central government has not yet officially approved them, but is conducting pilot programs to assess the initiative’s effects- an important step toward officially recognizing the innovation for nationwide adoption. e Ministry of Construction now allows smaller apartments below 60m2 to be
built. e success of Southern Dragon and Dat Lanh drew the attention of other developers and encouraged them to invest. Currently, developers in Hanoi and other parts of the country have implemented similar pilot projects with Ministry approval. Moreover, since 2009 the Viet Nam Government has offered incentives for investors in lowincome housing, in the form of exemptions from VAT as well as land-use or land-lease charges and corporate income. Although the above initiatives are not new to the world, they are nevertheless certainly new to Vietnam, demonstrating the growing inuence of the private sector as a driver of innovation.
Figure 1: Low-income apartments, Tan Binh industrial area, Tan Phu district, HCMC, Source: Tri Tran Minh
REFERENCES 1. Department of Planning and Investment, Ho Chi Minh City. 2000. Resettlement in Ho Chi Minh City. Workshop Report. Organization by Official Development Assistance Partnership for HoChi Minh City. March 2000.
CONTACT INFORMATION
2. Joint Report of the Government of Vietnam-Donor-NGO Poverty Working Group 2000, Vietnam–Attacking Poverty, Vietnam Development Report 2000.
Faculty of Urban Studies and Management, University of Social Sciences and Humanities, Ho Chi Minh City (USSH-FUS)
3. Nguyen Minh Hoa. 2000. Sociological Research on Housing Types in Ho Chi Minh City. Final Project Report. 4. Nguyen Minh Hoa. A comparative Study of Urban development in Metro Manila and Hochiminh City. Asian Scholarship Foundation &Institute of international Education, 2002. 5. Nguyen Minh Hoa. Social development in the South of Vietnam. Vietnam national University, Hochiminh city publishing house. 2006.
10-12 Dinh Tien Hoang, Ben Nghe Ward, District 1, HCMC (84-8) 39104529 http://dothihoc.edu.vn bmdothihoc@hcmussh.edu.vn
6. Research Center for Social Development and Poverty Reduction. 2001. Participatory Research and Action on Urban Poverty Reduction. Training Manual University of Social Sciences and Humanities. 7. Social Aspect of Relocation and Resettlement in Nhieu Loc-i Nghe Project. Workshop Report No 1. Resettlement in HCMC.P.49-51. 8. Urbanization in Vietnam and Southeast Asia. 1996. Publishing House of Ho Chi Minh City. 9. Vietnam National University. Building indicators to measure the quality of urban life in Asian countries. 2007.
With support from