Working with informal settlements in Viet Nam urban development - - PowerPoint PPT Presentation

Working with informal settlements in Viet Nam urban development context

• Dr. Nguyen Quang

Habitat Program Manager, UN-Habitat Viet Nam 27 May 2014

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

Contents

Viet Nam Economy

3

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

Viet Nam Headcount Poverty Rates 1998-2008 Source: General Statistics Office (2009), cited in Nguyen (2011a)

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Remarkable changes in housing, land & real estate policies

1980 1990 2000 2010

Doi Moi policy 1986

1991 Housing Ordinance: privatisation of housing 1992 Constitution: LUR transference

1992 Decision 118: abandon state housing subsidy

1993 New Land Law

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 1995 Draft National Housing Strategy prepared 2013 Loan package of VND 30,000 billion (USD 1.4 billion) by the State Bank (Resolution 2) 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 2004 National Orientation of Housing Development to 2020 (PM Decision 76) 2007 National Orientation of Housing Finance to 2020 (PM Decision 105)

Source: adapted from UN-Habitat (2014) Viet Nam Housing Profile

2011 National Housing Development Strategy to 2020, with a vision to 2030 (Decision 2127)

5 — 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 100,0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

% of total

World More developed regions Less developed regions Viet Nam

Source: produced from United Nations, Department of Economic and Social Affairs, Population Division (2012)

• Total population:

88.8 million

• Urban growth rate 1999-

2009: 3.4 o 3.7 per cent per annum

• Urban population: 30 %

(2009)

Viet Nam Urban Population 1950-2050

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Impressive achievement of the policy changes

Number of housing units (urban areas) increased from 4 million in 1999 to 6.8 million in 2009 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

• r induced by the market

Social housing programme students, workers at industrial parks, and low-income people have 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

Critical Urban Issues

• Over-urbanization often results in distorted and

spontaneous urban patterns

• Urban finance is largely subsidized by state budget

and ODA investment. Infrastructure provision lags behind urbanization process

• Planning system is not participatory and strategic and

lack a enforced development control

• Discretionary state intervention in planning,

investment, land use led to informal development

• Gaps between rich and poor is creasing and reflecting

in urban structure with the emerging gate-community and new “slum” pockets

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POVERTY

• Higher poverty density
• Emerge of low-income

pockets in residential areas in all cities (30% area population)

• Urban social problems

increase

• Farmers lose their land

WATER & SANITATION

• Poor access to clean water in district towns
• Serious lack of wastewater collection and

treatment, drainage system

• No sewerage or drainage surcharges)
• Environmental degradation
• Flooding and pollution are most severe in

largest cities

TRANSPORT

• Congestion
• Air pollution
• Serious accidents
• Insufficient inner city roads
• Little attention to parking

areas

• Lack of land for transportation

HOUSING

• Serious hosing shortage
• Uncontrollable self-built activities
• Sub-standard and temporary housing
• Widespread of speculation practices
• Low-income households cannot access to

affordable housing

SOLID WASTE

• Disqualified landfills
• Conflict between service

quality and subsidized budget

• Challenges to maintain and

upgrade or expand the services properly

INSTITUTIONAL CHALLENGES CLIMATE CHANGE IMPACT

PRESSURES ON URBAN AREAS

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BUT

Large proportion of People’s housing & Informal housing 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)

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Informal housing development in Binh Hung Hoa (12 kilometres north of the centre of HCMC)

November 2000 January 2010 November 2002 July 2010

Phu Dien - Increased density of peri-urban village development (8 kilometres west of Hanoi city centre)

Urban sprawl: Unplanned, informal patterns of development  challenges for basic urban infrastructure provision

Source: adapted from UN-Habitat (2014) Viet Nam Housing Profile

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% of urban population living in slum areas (2009)

High % of slums, but they mainly requires the improvement only 1- 2 components of slum

10 20 30 40 50 60 70

Note: (a) Computed from country household data using the four components of slum (improved water, improved sanitation, durable housing and sufficient living area). Source: United Nations Human Settlements Programme (UN-Habitat), Global Urban Indicators Database 2012.

58,7 28 9,8 3,5 Extreme (3 or more deprivation) Severe (2 deprivation) Moderate (1 deprivation) Non-slum 2,2 11,3 0,9 13,6 Sufficient living area Durable housing Improved sanitation Improved water Distribution of slum dwellers by degree of shelter deprivation (%) Distribution of moderately deprived slum dwellers (one deprivation) by type of deprivation (%)

High number of inadequate housing (slums)

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• 2

2 4 6 8 10 12 14 2019 2029 2030 2049

• No. of housing units

(accumulated) Urban Rural

• Log. (Urban)
• Log. (Rural)

Accumulated number of new housing units needed to accommodate newly forming families for selected years (million of households)

370,000 units/ year = 1,014 units/ day = 42 units/ hour

Housing demands in urban areas by 2049

High housing demands

Source: adapted from UN-Habitat (2014) Viet Nam Housing Profile

High housing demand and lack of affordable land supply  65-68% of households can

• nly afford to buy houses built progressively on peri-urban land
• 25 % of income/ month for housing cost

20% 68% 7% 5%

Affordable None of 3 types

10% 65% 15% 10%

High income HHs

• 35 % of income/ month for housing cost

Low income HHs Affordable for Type 3

• 30 m2, single storey

semi-permanent

• VND 90 million (USD

4,840)

• built progressively by
• wner-builders on peri-

urban land Affordable for Type 1

• 60m2, good standard

permanent

• VND 840 million

(USD 45,100)

• Corporate built

Affordable for Type 2

• 40 m2 ,moderate

standard permanent

• VND 400 million

(USD 21,500)

• mostly self built

Assumed standard of affordability: 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

House price-to- income ratio

• 7 ~ 8 in

average

• 23 for bottom

20%

• affordable for
• nly the top

5 % of urban HHs

(calculated with average construction costs for 60 m² / unit & average HH income)

Source: adapted from UN-Habitat (2014) Viet Nam Housing Profile

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A conceptual view of the housing development and improvement process

Why does not the current policy work well?  Importance of good institutional framework

Institutional issues

State Organizations Legal Land Users/ Occupiers Farmers / Villagers Illegal Land Speculators Agricultural Land & Garden Illegally Subdivided Land Encroached Public Land Residential Land Semi-legal Land Users/Developers Illegal Land Users/Developers Subdivided Plots and Houses Selected Employees Formal Development Informal Development No development approval Development approval Allocation with state price Formal transfer Illegal transfer / encroachment Semi-legal transfer

INFORMAL ACCESSES TO LAND FOR DEVELOPMENT: 1, 2 and 3 2 1 3

Types of Development

Housing Finance

• Housing finance system moved from solo reliance on stat

budget to multi-investment sources

• 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

• Lack of shareholder equity and long-term capital
• Housing finance is still developing when main finance

sources from FDI, domestic savings and oversea remittance.

• The mortgage market is emerging so far reaches a small

proportion of the population.

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Infrastructure and Basic Urban Services

• Under reform, infrastructure development is funded

from multi-resource investment

• Infrastructure provision contributes significantly to

economic development and poverty reduction

• Vestiges of subsidized policy constrain effective /

efficient infrastructure provision and operation

• Infrastructure provision lags behind uncontrolled

urbanization.

• Economic return from the service is not captured for

continuing infrastructure development

• Limited involvement of private investment actors
• Conflicting interests exist in infrastructure provision

and management.

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18

Construction Industry and Materials

• Fast construction development due to expanded

economic activities under reform

• Construction boom led to high demand of

construction materials

• Old practices of “application and approval

mechanism” constrain efficient operation of construction industry

• State construction corporations receive certain

business preference

• Lack of transparent bidding mechanism
• High level of corruption risk and practices

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7 criteria required for housing to be adequate

Security of tenure (legal protection against forced evictions) Habitability Affordability Availability of services, facilities and infrastructure Accessibility Location Cultural adequacy

Housing “lodging, shelter for human

• habitation. The immediate

physical environment, both within and outside of buildings, in which households live and which serves as their shelter”.

Housing is our link to the neighbourhood and larger community.

Concept of the right to adequate housing

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UPGRADING Improvement strategies Infrastructure provision Settlement planning Land regulation Housing improvement Curative approach PREVENTION Housing Policies Provision of serviced land Housing finance Regulatory reforms Building industry capacity Preventive approach

Recommended strategies to informal housing & inadequate housing (slums)

Informal & Inadequate Housing

• Estimate realistic land requirement

and plan for extensions on the peri- urban fringes, designating main transport and development corridors and water retention areas and public space where no building should occur.

• Urban upgrading programmes for

villages and agglomerations on the urban fringes to provide for existing inhabitants and to anticipate increasing populations.

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Better, earlier infrastructure on the urban fringes and expanded urban upgrading

• Land banking:
• Resource savings for development at low cost
• Help to contain land speculation, redistribute land to the poor, and

finance infrastructure investments.

• Land sharing:
• Land/slum occupants accept incentives to lease or sell part of their

property below market price in return of buildings on site

• Land readjustment:
• Fragmented adjoining sites being re-arranged to provide land for

development purposes

• Incremental land development strategies:
• Allowing settlement on unserviced land and infrastructure be

installed incrementally

Increasing the supply of affordable serviced land

• Provisional tenure granted to existing slums and informal

settlements

• Identify slums and informal settlements and determine they

are vulnerable to environmental hazards

• Temporary occupation licenses or permits provided to

residents to be relocated for a limited time

• Revise planning regulations, building standards and

administrative procedures to reduce entry costs, ease restrictions and accelerate the supply of new legal housing and developed land

• Charging taxes on all land to discourage speculation and ensure

a steady supply of land for housing

• Allow land and housing to be developed in phases

Policy measures to make land more available to the poor

Benefits

• Efficient to meet the various

demands of different groups

• Provide services and housing in

affordable cost

• great potential to generate both

employment and local income multipliers

• strengthen community cohesion.
• Resources could be mobilized

from community contributions

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Creating space for urban communities Enabling actors

People themselves Communiti es NGOs, Civil societies Academics Public Private (formal & informal)

Through …

• Legal environment
• Institutional environment
• Regulatory environment
• Availability of housing finance

It needs to enable diverse actors in the provision and

• peration of infrastructure, services and housing.

Alternative financial arrangements

• Another efficient tool to enable broader, non-

discriminatory access to affordable housing finance

Examples

• shorter term credit
• small loans at unsubsidised or low or zero interest

rates to the poor

• promote incremental housing improvement and

construction etc. via mechanisms like daily savings schemes

• community mortgage programs
• community-based rotating savings
• credit cooperatives
• housing micro-finance & NGO housing programs

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Housing finance

• Challenges of development of informal land markets which is

affordable to most of people and rapid and unplanned conversion

• f rural land into urban use in the fringes of Vietnamese cities

post Doi Moi

• The need to formalize informal land process through enabling

strategy:

• Planning more efficiently with realistic land requirement, public

space system and better and earlier infrastructure on the urban fringes

• Expanding urban upgrading approach
• Making affordable serviced land more available to the poor: land

banking, land sharing, land readjustment, incremental land development

• More community participation
• Financing for progressively built housing

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Conclusion

Thank you for your attention!