Lengthy procedures haunt the real estate enterprises

Removing the procedure of issuing construction permit for a real estate project is a target that Ho Chi Minh City is trying to implement.

This issue was informed by Mr. Tran Trong Tuan, director of the Department of Construction at the direct dialogue between the Department of Construction and real estate enterprises Tran Trong Tuan, director of the Department of Construction in HCM City over the weekend.

Procedure issues always haunt the enterprises investing in housing development projects. Enterprises frankly say repeatedly said that there have too many procedures, enterprises face difficulties at all levels. It takes at least three years to complete a legal document for the project, and till that time the opportunity has long been passed. It is the reasons why many enterprises have opened for sales without construction permit.

Moving toward one-stop procedure

According to Mr. Tran Trong Tuan, the Department of Construction is piloting the inter-procedural process. If the investor completes many procedures at one time, the Department will receive immediately. If the investor wants to implement separate procedures, the Department will still receive the documents and implement.

Currently the process of piloting “3 in 1” with the procedures: basic design evaluation, technical design evaluation and construction permit issuance. Pilot phase will be implemented from now to the end of year, then summarizing to shorten the time of issuing construction permit procedures with the ambition to reduce from 120 days to 42 days.

Mr. Le Huu Nghia, Director of Le Thanh Company, highly appreciated the convenience of the piloting procedures of Department in granting construction permit. Le Thanh is the pilot enterprise of one-stop procedures. The receipt and return of documents of one-stop procedures has removed all difficulties for enterprises. Department of Construction will do all procedures.

If within 12 days as prescribed, the authorities have no written reply to the Department’s opinion, it means that the Department of Construction will issue licensing decisions. There is no longer the status of Department return the documents and businesses bring documents to each agency, departments for advice as what is happening. In some localities, it takes 06 months without any results.

According to Mr. Tuan, HCMC is trying to overcome the lack of interconnection between agencies. According to opinion of some enterprises, Ho Chi Minh City should recommend the Government for permission to verify the design and check the acceptance procedure. According to the current procedure, enterprises need to invite the inspection team from Hanoi for acceptance each stage, which is very expensive.

Opinions of  Mr. Le Hoang Chau, chairman of HCMC Real Estate Association about this issue, the association has proposed the modification of the regulations on appraisal and approval of construction design of grade 1 works (over 20 floors) regulated in Decree No. 59/CP on construction investment project management agencies to be the Department of Construction.

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According to the regulations, the agency specialized in construction under the Ministry of Construction and the Ministry for Management of Specialized Construction Works under the provisions of Article 76 of the above Decree shall organize the evaluation. Grade 1 works are mainly invested in HCMC and Hanoi. Recently, the Ministry of Construction has assigned the provinces to decide on evaluation of up to 20 floors and the height not exceed 75m. It is necessary to permit implementing in Ho Chi Minh City and Hanoi to solve difficulties for enterprises.

To create favorable conditions for enterprises, Mr. Le Huu Nghia said that it is necessary to amend the design standards. The current regulation about the technical size in the basement, the attic is calculated from the rate of land use. If the city allows businesses to swap three basements up to build three floors above the business will save a lot. The cost of building a basement is 3 floors above. The soil in the city is very weak to avoid subsidence.

Handle prolonged projects

Also in the talk, many enterprises proposed  HCMC to tackle difficulties soon many large-scale projects which have started more than a dozen years but still leave vacant land.

According to representatives of Thao Dien real estate company, its social housing projects stagnated in the past nine years because of the approval procedures for investment decisions of the City People’s Committee. This project is part of the North Rach Chiec urban area project, invested by Real Estate JSC No. 10 (RES10), approved by the Prime Minister in 2001. however, the project hasn’t been completed the structural part.

According to Mr. Le Hoang Chau, the suspension of North Rach Chiec urban area is because RES10 has not negotiated on the clearance issue of the household adjacent to the Hanoi Highway yet. Therefore, the internal infrastructure can not connect to the general infrastructure of the area.

Representatives of Him Lam Company said that it is also the owner of a secondary project in the North Rach Chiec urban area. After RES10 completed the local infrastructure and connected to the general infrastructure, handed over the project to the city, then the city allocated land to secondary investors. However, because RES10 has not completed the infrastructure, has not collected traffic as stated in the Decision of land allocation of the Prime Minister so the project lasted long.

The reason is that the owner  in charge of infrastructure  has not fulfilled their responsibilities. Him Lam has started the compensation, clearance and infrastructure for the project since 2002 and still has to wait up to now.

Mr. Chau proposed that Ho Chi Minh City can handle the problem as applied to Thach My Loi residential project, District 2 by recovering the project and assigning to member companies to implement. Or the city needs assistance in site clearing.

One of the major obstruction preventing the  development of real estate market in Ho Chi Minh City is a lengthy, prolonged, negative administrative procedure that is likely to lead to harassment during the approval process. Therefore, quick settlement of procedures is the expectation of the real estate community currently.

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