Sub-licenses: Untold stories in real estate sector

Recently, in each working session with ministries, sectors and local authorities, Prime Minister Nguyen Xuan Phuc always emphasised the need to reform the administrative procedures, especially the obstructive sub-licenses thoroughly.

However, after considerable effort, most enterprises still encounter difficulties in handling the current procedures.

To avoid missing the opportunities and favourable timing to start a project, businesses have to wriggle out of red tape at all costs. It is said that the palm-greasing cost for real estate firms usually fluctuates from 10% to 20% of the total investment capital.

Pham Chi Lan, a prominent economist, said that according to a World Bank's survey, tax and fees accounted for 40.8% of the company's profits. Of every VND1 a business can earn, about VND0.72, even VND1.02, has to be spent on palm-greasing cost and corruption.

Regrettably, business leaders often avoid the topic of sub-licenses and palm-greasing cost for fear of harming their business.

Of course, all these extra costs are illegal, so there is no statement for them. Therefore, to avoid losses or compensate for profits, the palm-greasing costs are still included in the production cost one way or another and the buyers are the one to lose.

However, in reality, some businesses do not have to shoulder these costs. It is the local leaders that cut through the red tape for enterprises, as in FLC Group project in Binh Dinh province.

The determination and actions of the Government have enhanced the confidence of the business community. Apart from the problem of capital, an obstacle that is limiting the healthy growth of Vietnamese businesses is the cumbersome procedures, especially sub-licenses.