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Crumbling services threaten high-rise glory

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By Ben Bland, Financial Times

November 7 201O - Over the next few months, tenants will begin moving in to Vietnam’s tallest building, the Bitexco Financial Tower in Ho Chi Minh City, presaging the high-rise construction boom that will transform the skyline of the country’s main cities over the next few years.

The landmark 68-storey, 269-metre tower, made of glass and steel and designed to resemble a lotus flower – a national cultural symbol – incorporates Vietnam’s first skyscraper helipad.

But, local residents quip, unless the government does more to improve the crumbling infrastructure in Vietnam’s ever-more crowded cities, travelling by helicopter may soon become a necessity for executives rather than a luxury.

Leading international architects such as Foster+Partners and Carlos Zapata have been drafted in to ensure the swathe of new high-rise projects showcases Vietnam’s potential, attracts multinational corporations and propels the economy skywards.

However, planners are increasingly concerned that the government is failing to develop the public infrastructure and urban planning systems desperately needed if Hanoi and Ho Chi Minh City are not to go the way of traffic-clogged, slum-ridden Jakarta and Manila.

“Urban development is the key to economic growth, but without appropriate planning systems, land use and housing policies, it can lead to a lot of negative outcomes, including for house prices and sanitation,” says Nguyen Quang, who heads the UN urban development programme in Vietnam.

The country’s rapid economic rise over the last decade has changed the face of the country’s cities, with growing numbers of cars and motorcycles, increasing migration from the countryside and accelerating levels of construction.

Some 1m people are moving to Vietnam’s cities every year in search of work and a better life, but the government is struggling to cope with this rapid change because of the hangover of the central planning model, says Mr Quang.

The local governments in Hanoi, the capital, and Ho Chi Minh City, Vietnam’s main business centre, have formulated so-called development master plans and begun work on their first metro lines and new ring roads to ease the worsening congestion.

But their approach is too rigid and lacks a long-term vision, according to Paul Schuttenbelt, director of Urban Solutions, a Hanoi-based development consultancy that advises governments and big donors such as the World Bank. “Things are growing so fast in Vietnam that I wouldn’t like to be an urban planner here,” he says.

Mr Quang is also concerned that the government is prioritising profit-driven high-rise office projects, which are increasingly being developed by Vietnamese rather than just foreign investors, to the detriment of the wider public good. “When you build high-rise projects, you create a lot of negative externalities for ordinary people,” he says.

High-rise buildings require significant amounts of water and electricity and, with supplies of both increasingly tight, he fears residents will suffer shortages.

Vietnam’s Communist government accepts it needs to do more to revamp ailing infrastructure. The ministry of planning and investment believes the country needs $15bn-$16bn of infrastructure investment annually over the next decade and is hoping foreign investors will stump up much of the cash.

But analysts believe the government will struggle to meet this target because of red tape, lack of clear guidelines on public-private partnerships and the fact foreign investors tend to steer clear of less profitable basic infrastructure projects, such as rural school and road construction.

The challenges facing Vietnam’s cities are similar to those faced by other rapidly developing countries as they enter middle-income status, and Ayumi Konishi, the Asian Development Bank’s country director for Vietnam, believes the government deserves credit for the steps it has taken so far.

“There has been a huge investment in upgrading waste water treatment facilities, sanitation and transportation in Vietnam’s cities over the last few years,” he says.

While there are concerns over the co-ordination of development plans and the pace of change, he says this needs to be seen in light of the fact that 10 years ago, bicycles were still the main transport for many people: “Jakarta still doesn’t have a metro system so it’s not fair to say that Hanoi and Ho Chi Minh City are so far behind.”

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