Working with informal settlements in Viet Nam urban development context Dr. Nguyen Quang Habitat Program Manager, UN-Habitat Viet Nam 27 May 2014
Contents 1. Vietnam urban development context 2. Urban spatial transformation post Doi Moi and the development of informal settlements 3. Addressing informal settlements and controlling urban sprawl 4. Conclusion
Viet Nam Economy PPP per capita: 3,250 USD in 2011, approaching that of a middle income country GDP growth rate of 7% (2000-2005) and 6.2% in 2011 Increasing disparity among the incomes of the rich and poor National Gini-coefficient: 0.43 in 2010 3 Viet Nam Headcount Poverty Rates 1998-2008 Source: General Statistics Office (2009), cited in Nguyen (2011a)
Remarkable changes in housing, land & real estate policies 1991 Housing Ordinance : privatisation of housing 1992 Constitution : LUR transference 1992 Decision 118: abandon state housing subsidy Doi Moi policy 1993 New Land Law 1986 1994 Decree 61 : Housing ownership; LUR transference between private org. in construction sector 2003 Land Law : withdraw land for a project 2006 Housing Law on Social housing 2013 Constitution revision 2000 2010 1980 1990 2007 National Orientation of Housing Finance 1995 Draft National Housing Strategy prepared to 2020 (PM Decision 105) 2004 National Orientation of Housing Development to 2020 (PM Decision 76) 2009 National Urban Upgrading Programme 2009-2020 Series of Decisions (65, 66, 67) for housing development for workers, students and low-income people in urban areas Source: 2011 adapted from National Housing Development Strategy to 2020, with a vision to 2030 (Decision 2127) UN-Habitat 2013 (2014) Viet 4 Loan package of VND 30,000 billion (USD 1.4 billion) by the State Bank (Resolution 2) Nam Housing Profile
Viet Nam Urban Population 1950-2050 100,0 Total population: 90,0 88.8 million 80,0 Urban growth rate 1999- 70,0 2009: 3.4 o 3.7 per cent per % of total annum 60,0 50,0 Urban population: 30 % 40,0 (2009) 30,0 20,0 World 10,0 More developed regions — Less developed regions 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Viet Nam Source: produced from United Nations, Department of Economic and Social Affairs, Population Division (2012) 5
Impressive achievement of the policy changes Number of housing increased from 4 million in 1999 to 6.8 million in 2009 units (urban areas) Housing space average urban housing floor area increased from 7.8 m2 per head in 1999 to 19.2 m2 in 2009 Urban changes modern residential areas with improved social and physical infrastructure and diversified housing typologies have been introduced or induced by the market Social housing students, workers at industrial parks, and low-income people have programme started to benefit from social housing programmes Real estate industry contributed significantly to the country’s GDP growth Private sector grown significantly Source: adapted from UN-Habitat (2014) Viet Nam Housing Profile 6
Critical Urban Issues o Over-urbanization often results in distorted and spontaneous urban patterns o Urban finance is largely subsidized by state budget and ODA investment. Infrastructure provision lags behind urbanization process o Planning system is not participatory and strategic and lack a enforced development control o Discretionary state intervention in planning, investment, land use led to informal development o Gaps between rich and poor is creasing and reflecting in urban structure with the emerging gate-community and new “slum” pockets 7
PRESSURES ON URBAN AREAS WATER & SANITATION HOUSING • Poor access to clean water in district towns • Serious hosing shortage • Serious lack of wastewater collection and • Uncontrollable self-built activities treatment, drainage system • Sub-standard and temporary housing • No sewerage or drainage surcharges) • Widespread of speculation practices • Environmental degradation • Low-income households cannot access to • Flooding and pollution are most severe in affordable housing largest cities INSTITUTIONAL CLIMATE CHANGE CHALLENGES IMPACT TRANSPORT POVERTY SOLID WASTE • Congestion • Higher poverty density • Disqualified landfills • Emerge of low-income • Air pollution • Conflict between service pockets in residential areas in • Serious accidents quality and subsidized all cities (30% area • Insufficient inner city roads budget population) • Little attention to parking • Challenges to maintain and • Urban social problems areas upgrade or expand the increase • Lack of land for transportation services properly • Farmers lose their land
A dualism in urban housing production (formal and informal) exists Urban housing production in 1999-2009 • 273,425 housing units/ year in average (contentious figure) BUT Large proportion of People’s housing & Informal housing 9
Urban sprawl: Unplanned, informal patterns of development challenges for basic urban infrastructure provision Phu Dien - Increased density of peri-urban village development (8 Informal housing development in Binh Hung Hoa kilometres west of Hanoi city centre) (12 kilometres north of the centre of HCMC) November 2002 November 2000 July 2010 January 2010 10 Source: adapted from UN-Habitat (2014) Viet Nam Housing Profile
High number of inadequate housing (slums) High % of slums, but they mainly requires the improvement only 1- 2 components of slum % of urban population living in slum areas (2009) 3,5 Sufficient living Extreme (3 or 9,8 area 70 more 60 deprivation) 13,6 50 28 Durable Severe (2 housing 40 deprivation) 30 0,9 20 Moderate (1 Improved deprivation) sanitation 10 58,7 11,3 0 Non-slum Improved water 2,2 Distribution of Distribution of moderately Note: (a) Computed from country household data using the four components of slum (improved water, slum dwellers by deprived slum dwellers (one improved sanitation, durable housing and sufficient living area). Source: United Nations Human Settlements Programme (UN-Habitat), Global Urban Indicators degree of shelter deprivation) by type of Database 2012. 11 deprivation (%) deprivation (%)
High housing demands Housing demands in urban areas by 2049 370,000 units/ year = 1,014 units/ day = 42 units/ hour 14 12 No. of housing units 10 (accumulated) Urban 8 Rural 6 Log. (Urban) 4 Log. (Rural) 2 Accumulated number of new housing units needed to 0 accommodate newly forming 2019 2029 2030 2049 families for selected years -2 (million of households) Source: adapted from UN-Habitat (2014) Viet Nam Housing Profile 12
High housing demand and lack of affordable land supply 65-68% of households can only afford to buy houses built progressively on peri-urban land 25 % of income/ month for housing cost 20% 68% 7% 5% House price-to- income ratio Low income HHs High income HHs 7 ~ 8 in average Affordable for Type 3 23 for bottom Affordable Affordable for Type 2 Affordable for Type 1 • 30 m2, single storey None of 3 • 40 m2 ,moderate • 60m2, good standard 20% semi-permanent types standard permanent permanent • VND 90 million (USD • VND 400 million • VND 840 million affordable for 4,840) (USD 21,500) (USD 45,100) only the top • built progressively by • mostly self built • Corporate built owner-builders on peri- 5 % of urban urban land HHs (calculated with average 35 % of income/ month for housing cost construction costs for 60 m² / unit & average HH income) 10% 65% 15% 10% Assumed standard of affordability: Source: adapted from UN-Habitat (2014) Viet Nam Housing Profile 1) a household spend less than 25 % of income per month under prevalent mortgage loan schemes 2) a household spend less than 35 % of income per month under prevalent mortgage loan schemes
Institutional Why does not the current policy work well? issues Importance of good institutional framework A conceptual view of the housing development and improvement process 14
Types of Development Formal Informal Development Development Development approval No development approval Selected Legal Land Users/ Semi-legal Land Illegal Land Employees Occupiers Users/Developers Users/Developers Allocation with state price Formal transfer Semi-legal transfer Illegal transfer / encroachment 1 2 3 Subdivided Plots Residential Land Agricultural Land Illegally Encroached Public and Houses & Garden Subdivided Land Land State Farmers / Illegal Land Organizations Villagers Speculators INFORMAL ACCESSES TO LAND FOR DEVELOPMENT: 1, 2 and 3
Housing Finance o Housing finance system moved from solo reliance on stat budget to multi-investment sources o State intervention is supply oriented rather than demand responsive. Subsidies are linked much to housing suppliers. Mix of “budget allocation” projects and demand driven “construction financed projects o Lack of shareholder equity and long-term capital o Housing finance is still developing when main finance sources from FDI, domestic savings and oversea remittance. o The mortgage market is emerging so far reaches a small proportion of the population. 16
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