Workers housing an urgent need, but bureaucracy in no hurry

Bui Thi Be Loan, 34, has been working for Freetrend Industrial A Co., Ltd in the Linh Trung Industrial Park in HCMC’s Thu Duc City for 10 years.

Three years ago, Loan and her husband, who also works at the Linh Trung IP, rented a room of more than 10 sq.m for VND1.2 million ($48) per month.

But when they had a baby, the room became too small, especially when her mother came to stay with them to take care of the little one when they went to work.

Two years ago, as recommended by a co-worker, she registered for a room at a housing project for workers built inside the Linh Trung Export Processing Zone 2, around 1km from her workplace.

One month after her registration, Loan got a deal to rent a 35 sq.m room for VND2.2 million a month. The housing project also has a preschool meant for workers’ children at the cost of VND1.8 million per child per month that also opens Saturday to match the work schedule of workers.

With a total income of more than VND20 million per month, Loan said she and her husband would be able to save a little after paying for the monthly rent and the preschool fees.

Bui Thi Be Loan, her mother and her son in the new room of 35 sq.m at a housing project for workers built inside the Linh Trung Export Processing Zone 2 in Thu Duc City, October 2022. Photo by VnExpress/Le Tuyet

Built by HCMC-based Thien Phat Production Trading and Construction Investment JSC, the housing project that Loan’s family has been staying in comprises 368 apartment houses of 35-38 sq.m that can accommodate more than 1,000 workers.

Nguyen Van Loi, the company’s general director, said that after almost seven years of operations, the project has never lacked tenants. Demand was higher than supply, so the place was always crowded.

He said the company wanted to build more rooms to meet the demand and it has already hired a plot on which 500 apartments can be built, but complicated procedures meant it had taken as long as 14 years to finally start work on the project.

In order to reach the ground-breaking stage in April this year, Thien Phat had to complete several procedures to prove that the project meets set social housing standards.

Existing laws allow smaller than normal apartment sizes for social housing projects. However, when the time came to start the project, authorities requested the investor to change the scale, stating that it must go in line with the 1:2000 scale ratio of Linh Trung Export Processing Zone as the project was to be built on commercial land that is not eligible for social housing standards.

The company has made many proposals asking for the project to be treated as a social housing project to lower the rent to half the market price for workers, but it has not been approved.

Loi said if his company deposits VND200 billion at the bank, it can earn a profit of VND1 billion dong a month without having to do anything. Meanwhile, with a similar investment in a housing project for workers, the company would make a profit of just VND200 million dong every month, and this after encountering many difficulties.

The land plot where Thien Phat Production Trading and Construction Investment JSC wants to build a new housing project for workers remains a vacant land since groundbreaking in April in this photo taken October, 2022. Photo by VnExpress/Le Tuyet

Nissei Electric Vietnam Co., Ltd, located in Linh Trung EPZ No.1, has faced the same difficulties when investing in social housing projects for its workers.

In 1999, when it first invested in Vietnam, Nissei Electric decided that it would take care of accommodation for its workers and rented a 9,500 sq.m plot to build a dormitory.

In 2005, the company started work on the project, investing $4 million of its own funds in it.

The company had its employees stay in the dormitory for free and spent $240,000 per year on operating the facility.

In 2018, the government issued Decree 82, banning residential areas in industrial parks and export-processing zones, only allowing accommodation for foreign managers and experts.

Mochizuki Daisuke, Nissei Electric’s general director, said the company was quite worried but thanks to the intervention of the NPZ, it was allowed to keep the dormitory.

It took until last year for the government to make adjustments to Decree 35 and allow workers to stay temporarily in accommodations built in industrial zones to serve the production and business activities of their employers.

Daisuke said this move allowed the company to maintain 80% of its capacity during the pandemic, with 1,000 workers working as normal while following social distancing rules.

He said that building accommodation for workers brings many benefits but it completely depends on the vision of the business as there are currently no policies to exempt or reduce land rent for such initiatives.

In 1991, HCMC established the Tan Thuan EPZ in District 7. After more than 30 years, the city has 18 industrial parks with nearly 1,700 businesses employing at least 320,000 people.

While the city has more than 1.3 million factory workers, it has just 16 dormitories that can accommodate about 22,000 people. The rest have to rent rooms on their own or stay with their acquaintances.

In most cases, the rooms for workers have an area of just 12 sq.m each, but host two-three people.

Currently, industrial zones do not have any land funds left to build dormitories for workers. In case they want to make adjustments to their plans, the complicated procedures would demand a lot of time and effort.

Trade unions also face many difficulties when participating in building housing projects for workers.

Le Van Nghia, head of the Project Management Board with the General Confederation of Labor, said the existing Land Law and Law on Real Estate Business do not allow the confederation to build social housing for workers.

“The confederation has its own fund and wants to invest and operate those projects on its own without profit so that workers can rent rooms at low cost,” he said.

Per current laws, the confederation must collaborate with city and province authorities to call for private investment and the local authorities will choose project investors.

However, Nghia pointed out that once businesses get involved, they have to put profit first, which means workers will have to pay higher rents.

Nghia said that in 2017, the government issued a decision approving projects to build trade union institutes in industrial parks. An institution would comprise a housing complex with cultural, sports, kindergarten and other amenities.

The confederation deployed the first such institute in the northern province of Ha Nam, but after finishing the first phase, it had to stop and adjust the entire project as the Land Law ruled that socio-political organizations, including trade unions, are not allowed to get land to build social or worker housing projects.

The government later issued another decision with amendments requiring that by 2025, the confederation finishes building 50 trade union institutes at IPs across Vietnam.

After this, 34 provinces introduced sites that could be used to build such institutes in their localities. However, work could not begin on these complexes because of planning issues. In several cases other projects had already been planned on those areas.