Key urbanization challenge: affordable land and housing

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A farmer spreads rice on a road to dry in front of a new town in Sai Dong Village, outside Hanoi. Photo: Reuters

Urbanization is an integral part of transitioning from a low to middle income country, so Vietnam should not restrain migration to cities. But, it will need to carefully manage the trade-offs that will come with rapid urbanization, Dean Cira, the World Bank's urban specialist, told the media recently.

Urbanization in developing countries tends to involve intensive construction and changes in land use, often without long-term planning and building of essential infrastructure. What are the right choices to make during a very rapid urbanization process?

Dean Cira: One of the things we notice and recommend around the world is that during rapid urbanization, although the governments are focusing on many aspects of planning, two areas are the most critical - ensuring mobility of the labor force and consumers and ensuring that the land and housing markets remain affordable.

So in this regard, we would advise that governments need to place most of their focus on providing large-scale infrastructure, and leaving most of the housing and tertiary-level infrastructure provision to the private sector because we don't know at what point in time, where the most of the demand will be for housing and land services. So, focusing on mobility, focusing on the affordability of land and housing should be the key priority of planners in rapidly urbanizing cities.

What are the major benefits and challenges that Vietnam's urbanization poses, especially in big cities like Hanoi and Ho Chi Minh City?


World Bank's urban specialist Dean Cira

Vietnam, like most countries that experience urbanization, is also experiencing strong economic growth. So, urbanization helps boost economic growth, creates economic opportunities as well as jobs for both skilled and unskilled workers. And we have also seen that the urbanization process has helped Vietnam reduce its overall poverty rate remarkably over the last 15 years.

But, of course, there are challenges that remain, particularly in the large cities. This ranges from needing to revise the way planning is done so that it's more participatory and uses more modern planning principles, but also addressing issues that are emerging like traffic congestion, lack of transit infrastructure and environmental sanitation issues such as drainage, wastewater treatment and water supply. Addressing these issues and ensuring affordability because we're saying housing is becoming out of reach for many citizens will be another main challenge for Vietnam going forward.

Urban planning currently focuses too much on having new buildings, which increases the population and construction density and reduces the quality of living environment. What planning model do you think Vietnam should follow?

There is a popular belief among planners and among Vietnamese generally that the population density of the major urban centers of Hanoi and HCMC need to be reduced to improve the quality of life. But if we look at the density of Hanoi, we actually see that by Asian standards, it is not particularly dense.

Indeed the average population density of Hanoi is less than Seoul, Tianjin and Hong Kong, all of which are considered to be quite livable cities. Planners in Vietnam and indeed everywhere need to focus on ensuring mobility for labor and consumers and affordability of land and housing for firms and households. On this score, Vietnam's planners can do much better.

While Hanoi may not be particularly dense compared to other Asian cities, it does lack the infrastructure to support its population densities. Take a look at road space, for example. In his work for the Vietnam Urbanization Review, Alain Bertuad, a well-known urban expert, shows us that in the central business district of Hanoi only 9 percent of the area is devoted to street space, making it similar to Bangkok which has notorious traffic congestion. Compare that to New York's Midtown Manhattan or Seoul's central business district which devote about 32 percent and 14 percent, respectively, both of which have excellent mobility options.

Similarly, Hanoians take fewer than 60 transit trips per year compared to about 250 for those living in Barcelona, Spain a city of similar population density. The reason is a lack of transit infrastructure.

The point here is that Vietnam's planners need to focus not only on building new towns and buildings, but on ensuring widespread, good mobility for its citizens and affordability of land and housing. To this it has to appropriately plan and sequence the development and integration of land and housing with transport as a primary focus.

What is the urbanization dynamic you see in Vietnam?

There is some evidence to suggest that access to basic services is better in urban areas than in rural areas, and in larger urban areas than in smaller urban areas in Vietnam, which is often a reason for people to migrate from rural to urban areas. But it is also evident that people in Vietnam are migrating in large part for better economic opportunities (pull factors) rather than for lack of services in rural areas (push factors).

You seem to be suggesting that the migration to cities should not be restrained or stopped. Then how do we manage the difficulties and challenges?

Urbanization does not guarantee economic growth and modernization, but an integral part of Vietnam's transition from a low to middle income country and beyond may well depend on how well it manages the transition from a largely rural to an urban economy nearly all countries become at least 50 percent urbanized before fully reaching middle income status.

Vietnam expects to reach that point by 2025. These are strong reasons not to attempt or restrain migration to cities. But, Vietnam will need to carefully manage the trade-offs that will come with rapid urbanization.

There is the potential for increased congestion costs, regional inequalities, increased urban poverty, urban pollution and rising land and housing prices. Some of these risks are already manifest and increasing rapidly.

At the same time, Vietnam must be ready to employ urbanization as an instrument to sustain economic growth and opportunity for all. This will mean, among other things, ensuring the economic competitiveness of key economic regions, ensuring the economic, social and environmental sustainability of cities, including small and medium sized cities, making them desirable places to live and work for all segments of society and increasing economic productivity through accelerated technological advances and a better trained, educated and mobile workforce.

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