The Freestanding Right To A Habitable Shelter
Part 3: The Perfect Storm
My attempt at understanding affordable housing and finding the means to create a true low-cost housing boom.
The Meaning of the Storm
In my previous articles, I mentioned the various reasons why we need “low-cost” housing and why Vietnam is one of the many places on earth that will need it the most in the immediate future. In this Part 3, I want to focus some of the ingredients that can validate this need in Vietnam and also lay the groundwork describing the potential values for any social-conscious developers to gain significant profits.
“A sudden occurrence of something in large amounts.”
First, I want to explain why I am calling this particular article “The Perfect Storm”. When we think of a storm, most likely we are thinking of it as a form of catastrophe. A catastrophe — according to Merriam-Webster — is defined as “the final event of the dramatic action especially of a tragedy” or “ a momentous tragic event ranging from extreme misfortune to utter overthrow or ruin”. In some respect, this is not that far off to my intention for the word “storm”, but of course without the tragedy, misfortune and ruin part. To sum it up and similarly, for me when I think of a “storm”, I am thinking of an event where many actions or situations which occurs simultaneously in abundance without controlled logic or structure. I see it as an event that can overwhelm any subject in its path and as a result, this can decidedly alter the course of that particular subject. More clearly, Merriam-Webster’s short definition of a storm is “a sudden occurrence of something in large amounts”.
Now, the “perfect” portion of this title to me describes something that was never anticipated. In its purest form, perfect is meant to portray something that was so perfectly created, the notion of anticipating it or seeing it coming would never happen. For the purpose of this article and putting these two meanings together, to me “The Perfect Storm” represents a situation or an event where a series of unplanned factors suddenly occur simultaneously to set up an ideal setting.
Elements of the Storm
In any country, the adequacy of its public infrastructure often defines its current state and condition relative to progress. Any successful developer would acknowledge that in order for a country to flourish, one of the most important factor that requires the most attention is the development of its infrastructure. Investment in infrastructure development not only can boost the economic growth for say country, more specifically for disaster prone regions, but the establishment of essential public infrastructure is an important ingredient for recovery, sustained the economic growth and reduction of poverty.
When we talk about infrastructure, we are referring to the many components that are required in order for any community or society to function properly. This is usually referred to elements such as roads, bridges, transportation, water supply, sewers, electrical grids, telecommunications, etc. Without any of these fundamental structures to support the community, it is hard to see how that community can grow or evolve.
Other important factors that can change the prospect of a country also include significant and steadily amount of foreign investments, relationships and partnerships with other powerful nations as well as the eagerness, capabilities and potentials of its citizens.
Factor One: Transportation Infrastructure
For Vietnam, the development and improvement of its transportation infrastructure have been the focal point of the local government since its inception into the WTO in 2007. In 2016, we are seeing a significant amount of investments dedicated to the much needed modernization of the rapid transportation network within the urban areas. A good example is right outside my window at this very moment, I can see the very first metro line in Ho Chi Minh City being constructed to connect District 2 to the heart of District 1. This construction only started a little over a year ago. If you tell me two years ago to live in District 2 and commute to District 1, I would tell you that it is too far for me. But now, the main connecting bridge that serve as the artery from District 2 to District 1 have doubled in size and District 2 also added the longest underwater tunnel in Southeast Asia which connects Thu Thiem to the other side of District 1. Needless to say, District 2 is no longer a long distant journey, but rather a short commute.
Nationally, since 2009, Vietnam along with Japan have been building a high-speed railway using Japanese technology which when completed, it will be an express route of 1,630-kilometer-long, serving a total of 26 stations, stretching from the northern capital of Hanoi to the southern city of Thu Thiem in Ho Chi Minh City. This is part of the US$23 billion budget allocated to improve the transportation network by the Vietnam’s government from 2007 to 2020 which also includes the six urban rail lines within Ho Chi Minh City. With over 80 kilometers worth of the proposed rapid urban transit network, these six urban lines stretching from the city center into the outskirts rural areas, have already been recognized as one of the most expensive per meter metro line development in the world.
With the development of these transit systems, it will enable and extend the capacity for the citizens to branch out and find sufficient adequate livable neighborhoods on the outskirts of the city along the peripheral of the urban transit lines. In return, this can significantly unclogged the city center, reduce the carbon footprint, lessen traffic conditions, while eliminating the need to build more housing within the costly and scarcely land of the city.
Factor Two: Sanitation Infrastructure
The sanitation and water supply infrastructure development in Vietnam has been characterized as challenging and successful — depending on who you ask — by many supporting nations. Since its acceptance to the WTO in 2007, Vietnam has significantly increased investments — most notably with the support of the World Bank — to improve wastewater treatment of the entire country, especially within the urban canal areas. Although there are many challenges to maintain the quality and reduce the on-going pollution, these investments have already resulted in a far much better living conditions for city dwellers in the last decade. With an increase investment from US$6.5 billion a year to US$110.5 billion for the next ten years, Vietnam is anticipating not only to clean up the existing conditions, but it is planning to build additional supporting infrastructure in order to maintain the steadily economic growth of the country for decades to come.
“…recognizing that the FDI sector is an integral part of the economy — essential to restructuring the economy and raising national competitiveness.”
Factor Three: Steady Increase in Foreign Direct Investments
In Part 2, I briefly mentioned about the establishment of the new Housing Law and the Law on Real Estate Business in Vietnam that came into effect in 2014, allowing foreigners and overseas Vietnamese for the first time in history to legally own, sell and transfer real estate properties in Vietnam. This revised Housing Law brought in billions of Foreign Direct Investments (FDI), single-handedly rejuvenated the entire real estate market and sent a message to the world that Vietnam is open for business.
According to the World Economic Forum’s article written in 2014 by former Vietnam’s Prime Minister Nguyen Tan Dung, “attracting foreign direct investment (FDI) has always been a key part of Vietnam’s external economic affairs. Vietnam already has many comparative advantages and a strong investment climate, but we are working hard to become even more appealing to foreign investors. We are doing so by vigorously renovating the business and investment climate, and by recognizing that the FDI sector is an integral part of the economy — essential to restructuring the economy and raising national competitiveness.”
In that same year, Vietnam added more than 16,300 active FDI projects and collectively pulled in over US$238 billion from world’s leading multinational corporations of over 100 countries and territories. Compared to 2013, the FDI inflow only exceeded $22 billion, but it was a significant increase of more than 35% from 2012. These figures naturally indicated that Vietnam have become a destination of choice for foreign investors.
In a more recent publication in May of 2016, Mr. Carl Delfeld of the Wall Street Daily stated that “It’s Time to Invest in Vietnam”. In this article, Mr. Delfeld pointed out several points that contributed to this attractive evaluation of Vietnam’s economy. Below is an except from Mr. Delfeld’s article.
The list of Vietnam’s positives is really quite impressive.
Here are just a few for starters:
- A low level of capital stock so every dollar of investment yields big jumps in productivity.
- Attractive demographics to fuel consumption.
- A talented, well-educated, ambitious population with great faith in their future.
- Low real wages for a decisive competitive advantage.
- Tremendous opportunities for market reforms to unlock blocked potential.
- Low valuations and rising, robust foreign investment to drive its industry and stock market forward.
Mr. Delfeld also stated that along with a literacy rate of 95%, energy independence, a new prime minister who’s hard-pressed to reform and privatize the state-owned companies that still represent 40% of Vietnam’s economy — the upside for investors certainly outweighs the risks.
With the steady increase of FDI in the area of manufacturing, real estate and finance, Vietnam will see its youthful population flourish in this new economy. These achievements will no doubt will improve the lives of its citizens and increase the expectations of a higher quality standard of living for everyone.
“It is time for the planners to abandon abstract objectives and to focus their efforts on two measurable outcomes that have always mattered since the growth of large cities during the 19th century’s industrial revolution: workers’ spatial mobility and housing affordability.” — Alain Bertaud of NYU and former principal planner for the World Bank.
Factor Four: The Potentials of Its Citizens
It is a well known fact that majority of the Vietnamese population is made up of mostly young people. According to the UNFPA, the United Nations Population Fund, there are currently 24.6 million young people — aged 10–24 — in Vietnam as of January 2016, making up almost one-third of the entire population while the other one-third is less than 35 years old. By far, this number is the highest-ever percentage of young people in Vietnam’s history. The need to have structured targeted policies and appropriate services in order to maintain the youthful success and well-being of its young citizens are an absolute necessity in order to bring out their full potentials.
Surprisingly, according to the Organisation for Economic Co-operation and Development (OECD), Vietnam has an education system that delivers impressive results, at least up to the high school level. Furthermore, the OECD also noted that the performance of 15 year old Vietnamese students in mathematics, reading and science in the OECD’s PISA study ranks 17th of the 65 countries covered, ahead of Australia (19th), US (36th), Thailand (50th), and Malaysia (52nd). However, the education system at technical and vocational level as well as university education fair much less in terms of impact and success.
Nevertheless, the attractiveness of this youthful population have captivated the interests of major Asian countries such as Japan, South Korea, and Singapore to heavily invest billions of US dollars into the young workforce and sizable market within Southeast Asia. As recently as a month prior to this writing, corporations from Singapore have invested a total of $37.9 billion in more than 1,600 projects in Vietnam as of June this year. One of the primary reason for these investments according to Mr. Leow Siu Li, Singapore’s Consulate-General in Ho Chi Minh City, is Singapore’s interest in the young population of skilled workers. In Ho Chi Minh City alone, Singapore have invested more than $9 billion for 847 projects in particular, focusing on logistics, services and real estate.
With the constant increase investments in infrastructure, steady growth of the GDP, soaring interest from foreign investors and the exuberant youthful attitude of a very young population, “The Perfect Storm” has arrived in Vietnam. Along with all the other supporting elements and necessary factors that come with it, this ideal scenario assures us that it’s time to focus on Alain Bertaud’s statement of the measurable outcomes that have always mattered to the growth of large cities: workers’ spatial mobility and housing affordability — for all citizens in Vietnam.
End of Part 3.
For Part 4, I will focus on the building process of how to achieve the optimal output of sufficient housing to support the rapidly growing population without compromising quality. This process is not novel by any mean, but it is my intent to look at it from a completely different perspective. For us to build in time and reduce significant costs, we not only have to look at a fresh new approach to the building process, but also incorporate the latest technological advancements from other industries in order to accomplish our visionary goals.
To summarize, this article “The Freestanding Right To A Habitable Shelter” has 5 parts to it:
- Part 1: Why Do We Need Affordable Housing?
- Part 2: The Emergence of Vietnam
- Part 3: The Perfect Storm (reading now)
- Part 4: Towards a New Building Process (coming soon)
- Part 5: Combining The Right Elements (coming soon)
Thank you for reading and stay tuned for Part 4.