VietNamNet Bridge - The Construction Ministry has proposed an increase in housing subsidies as a part of employee wages with an aim to help them resolve difficulties in accessing cheap accommodation.

The proposal was made under the Housing Development Strategy to 2020 with a vision to 2030 which was expected to be submitted to the Government next week.

Deputy Minister of Construction Nguyen Tran Nam said the Government supplemented housing cost as part of employee wages, following the abolition of housing allocations in 1992.

Statistics from the ministry showed that the subsidy accounted for 8 to 10 per cent of salaries, equal to nearly VND55,000 (US$2.8) a month.

Nam said low-income people still found it hard to buy or rent a house with the current subsidy as the payment had been based on less than current market prices.

He said people, especially workers at industrial zones, could not buy houses because of increasing prices despite the Government issuing a number of policies intended to provide cheaper accommodations.

“There is a contradiction between house prices and incomes,” Nam said, adding that Viet Nam ranked among the top 20 countries with the most expensive housing, despite only ranking 120th in terms of income per capita.

The ministry’s head of the Housing Management and Real Estate Market Department Nguyen Manh Ha said Vietnamese employees would have to save their entire salary for between 24 to 26 years in order to buy a house, while it would take people in other countries only three to four years.

The ministry has set a target to reach average area of 21.5 square metres per person by 2015 and 25 square metres by 2020. The country now has around 1.35 million households which have low-incomes and average living area of less than 10 square metres.

It said that in the 2011-20 period, the country would need to build 600,000 houses, accounting for 30 million square metres.

Total investment would be VND180 trillion ($9 billion) while State capital would account for VND36 trillion ($1.8 billion), with the remaining VND144 trillion ($7.3 billion) raised from the private sector.

To meet the target, the ministry has adopted several solutions, including urban planning, land funds and financial support.

Nguyen Dang Son, deputy head of the Institute for Urban Research and Infrastructure Development said the supplementation of housing costs as a part of wages should be increased gradually due to the limited State budget.

The level could reach 15 per cent of total salaries by 2015 and 20 per cent by 2020.

Deputy Minister Nguyen Tran Nam said the State Budget for low-income housing projects was limited, while the demand for housing was urgent, especially among low-income earners.

“Along with preferential policies from the Government, low-income earners should also be responsible for finding housing themselves,” he said, adding that the poor could contribute a part of their monthly incomes to the fund. The fund then would offer them low interest rate loans to buy their houses. The fund would also mobilise money from people who have their own houses and higher incomes to help others.

All employees with or without homes would be required to contribute 1 to 2 per cent of their monthly income to the fund.

“The country has over 9 million of employees. If every employee contributes 1 per cent of their salaries to the fund, there should be a sufficiently large source of capital to help the poor,” he said.

Ha said the strategy would focus on developing the fund and providing preferential policies to improve accommodation among ethnic minority people and households which are vulnerable to natural disasters and the poor in rural area.

Source: VNS