Benefit harmony will untie ‘knots’ in rebuilding old tenements, official

Ho Chi Minh City should implement many measures to harmonize benefits of investors, residents and the state to fulfill its plan of rebuilding 50 percent of downgraded apartment blocks by 2020, said director of the Department of Construction Tran Trong Tuan yesterday.

An old apartment block in District 10 (Photo: SGGP)

At a seminar hosted by Phap Luat (Law) Newspaper, Mr. Tuan said that rebuilding of old tenements has been difficult and slow for the last decade because of compensation and site clearance.

The department has built a one-door licensing process to reduce procedure doing time for investors as they have been uninterested in those projects for being afraid of risks, he said.

The city People’s Committee should intensify decentralization to districts to solve problems arising from the process of rebuilding old tenements, especially from compensation and site clearance, he suggested.

HCMC has dismantled only 32 out of 474 downgraded apartment blocks for the last ten years because of difficulties in compensation negotiations and site clearance, which has been irrational and unable to harmonize benefits among investors, residents and the state.

Site clearance has taken place for 5-7 years or even ten years at many apartment blocks such as 727 Tran Hung Dao in District 5, Co Giang in District 1 and 350 Hoang Van Thu in Tan Binh. Most households in these buildings have removed but about ten have refused to relocate demanding too high compensation rates. That is not fair to the removed households, he said.

In addition, local authorities have been not drastic to assist investors in site clearance for fearing complaints and legal proceedings, said Mr. Tuan.

Chairman of Duc Khai Company Pham Ngoc Lam who has finished the ten year lasting site clearance at 298 Tran Hung Dao within 12 months said they had offered satisfactory compensation level and created conditions for citizens in difficulties to have new jobs. Besides, the assistance by local authorities play significant role in settling the matter.

At 350 Hoang Van Thu, 130 households have agreed to relocate but 12 others including nine ineligible for compensation have yet to remove. They do not accept any measure given by the company, Mr. Lam said.

If local authorities do not intervene, the company will face difficulties for having to pay monthly interest on the amount of indemnity that has been paid to the 130 households while it is unclear that when site clearance will be done to start construction, he said.

According to him, rebuilding of downgraded tenements in HCMC has reached a deadlock because businesses, residents and authorities have not believed in each other.

Being afraid of disadvantages, residents have demanded indemnity too high compared to the actual price while negotiating with investors. Meantime, businesses have been afraid of risks to rebuild old apartment buildings and the intervention by the government has been insufficient, he said.

Despite affirming the company’s continued investment in renewing old apartment blocks in HCMC, Mr. Lam said that all projects implemented by his company have incurred losses.

Chairman of the HCMC Real Estate Association Le Hoang Chau said that investors have been uninterested in repairing old tenements partly because existing procedures to select investors are time-consuming and irrational. Planning norms on the old tenements’ rebuilding have not created conditions for investors to recover capital.

Chairman of Tan Binh district People’s Committee Chau Minh Hieu said the district has 42 tenements built before 1975 and most have ruined and downgraded.

Since 2008, nine of them have been listed in the city’s rebuilding plan but so far no investors have attended in the program as most of the tenements locate in alleys over small areas.

Mr. Hieu proposed to spend parts of land use fee revenue and the funds from sale of state owned houses on establishment of a credit fund to assist the investors.

Some tenements with too small premise should be sold and rebuilt in other places. Authorized agencies should permit districts to appoint contractors to renew old tenements and assist investors to attract dwellers to new buildings, he said.

Deputy chairman of Phu Nhuan District Nguyen Thanh Phuong said that a business in the district has spent on seven high class commercial projects but kept refusing to invest in old tenements.

By Hanh Nhung – Translated by Hai Mien

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