Land prices must revert to actual market value

(SGI) - Real estate experts believe that land is being inappropriately priced. This is causing huge losses to landowners as well as losses in tax revenue. It is now time to revert land prices to actual market value. 
Illustrative photo.
Illustrative photo.

When speaking with Saigon Investment, Prof. ĐẶNG HÙNG VÕ, a land specialist, said that the real estate market cannot operate smoothly when there is no real financial market for land.

JOURNALIST:  - Sir, in his recent speeches, Mr. Nguyễn Phú Trọng, Party General Secretary, has repeatedly stressed that the National Assembly members of this term must expeditiously make significant revisions to the Land Law in a way that takes the greatest advantage of the land resources for the development of the country. As a land specialist, what do you think about this matter?

Prof. ĐẶNG HÙNG VÕ: - I think this revised Law can be seen as a promulgation of the new Land Law, which is the legal foundation to actualize the goal of the Resolution made by the 13th National Party Congress. This is to say that by 2045, Vietnam will have become a high-income developed country. Therefore, the promulgation of this new law is a big goal that will take Vietnam to new heights.

We need to spend more time considering all the possible measures so as to set up a suitable land law system. The revision of the 2013 Land Law must be able to successfully cope with the currently unresolved land-related problems in several other laws such as the Construction Law, Housing Law, Real Estate Trading Law, Investment Law, Corporate Law, and Planning Law.

Besides this, it is essential to understand that revising or changing the Land Law and making a few amendments to the Land Law are two different factors which can be misunderstood. This misunderstanding can cause some serious delays or setbacks that are so common these days.

Since its introduction, the 2013 Land Law has revealed several shortcomings. Its biggest disadvantage is that investors get stuck in the investment procedures, making it impossible for projects to get started and take off in time. Many investors have put their money into some projects, but they cannot get them implemented because the laws are not flexible, and some even overlap one another. Local authorities do not dare to tamper with the regulations and thereby fail to approve the proposed projects.

However, a few matters need focusing on. Firstly, the revised Land Law must form the legal framework to drive our country forward and turn it into a future developed country. Therefore, the revised Land Law must be intelligent and comprehensive enough to pave the way for appropriate policies to facilitate more rapid economic growth for the country in coming years.

The revised Land Law requires deeper research and the participation of many parties, such as representatives of the people, businesses, and experts so that they together will be able to reach a unanimous agreement on important and crucial viewpoints and find appropriate legal solutions. This will make the law really effective and achieve the goal set forth in the Resolution adopted at the 13th National Party Congress.

Secondly, it is the matter of land ownership by Vietnamese people all across the country. Currently this is still an undefined concept. The concept of land ownership by the people of the whole country as defined in the Land Law must be applied in view of a market economy. Vietnam has accepted the market economy and used market economy tools to promote economic development. Hence, it is imperative to operate ownership across the entire country, making it a major policy decision.

Thirdly, settling disputes between the current Land Law and other related laws could be a major legal task. It is vital to ensure there are no more conflicts among the laws within the legal system. We need a Land Law which is able to guide our daily lives.

-  Sir, some experts believe that specific measures need to be legislated to make the best use of land resources. What do you think of this issue?

- People around the world think that land is of great significance because it is a dual resource. Inputs, or resources for economic development, can be one of three major resources, namely, land and natural resources; finance; people and technology. Of these three resources, land is the main resource in the agricultural development stage. Finance is the main resource for the industrial development stage. People associated with industry are the main resource for the post-industrial period.

Currently, Vietnam is in the process of industrialization to become a highly developed industrial country, so land is the main resource for the agricultural stage. Land is a dual resource, which means, it can be converted into money, or can convert land resources into financial resources. This is very necessary in the process of industrialization.

Currently, the actual situation in land market management and operation in Vietnam is posing a paradox. The National Tax Revenue does not collect much money from the land market, and the land users do not receive money which justifies the value of their piece of land. After each project, every process of land acquisition, site clearance, and land resources mainly falls into the hands of two kinds of people, who are either businessmen of large corporations or corrupt government officials.

The most recent report by the Central Government shows that upto 70% of complaints are related to land, with many dealing in unreliable land valuation. Therefore, land prices must revert back to actual market prices, instead of having prices unreasonably raised or reduced mainly for the benefit of rich businessmen or corrupt officials. The current released land price framework by the government is also rather impractical.

I think that this revision of the Land Law focuses on capitalization of the land, so the law must be reformed in all possible ways. So far Vietnam has not been successful in land capitalization. The Government does not collect much revenue from land, while land users are not satisfied with the Government's land acquisition policies. There are many shortcomings in the duration or term of land use for farmers.

A more detailed analysis of the land revenue can clearly show that 75% acquired agricultural land is allocated to housing projects, and 15% leased land to companies for production and business purposes, such as industry and services. Hence, tax revenue accounts for only 1.5%. This indicates that the land revenue collection in our country is skewed to collection of revenue from the added value of land as a result of conversion of agricultural land to residential land, which would be most reasonable in collecting taxes.

- Thank you very much.