Prof. Dr.Sc. Dang Hung Vo M.Sc. Do Duc Doi Ministry of Natural Resources & Environment of Vietnam.

Prof. Dr.Sc. Dang Hung VoProf. Dr.Sc. Dang Hung Vo

M.Sc. Do Duc DoiM.Sc. Do Duc Doi

Ministry of Natural Resources & Environment of Ministry of Natural Resources & Environment of VietnamVietnam

I. I. OVERVIEW (1)OVERVIEW (1)

Before 1986: Before 1986: Vietnam’s economy was State-subsidized, directed all Vietnam’s economy was State-subsidized, directed all the economic activities based on “ask-give” the economic activities based on “ask-give” mechanism (the administrative system directly mechanism (the administrative system directly managed state-owned enterprises as well as managed state-owned enterprises as well as community-owned economic organizations). community-owned economic organizations). The major labour force in agriculture was agricultural The major labour force in agriculture was agricultural cooperatives, and in industry and services it was cooperatives, and in industry and services it was stated-owned enterprises.stated-owned enterprises.The State allocated land free to individuals and The State allocated land free to individuals and organizations after considering their requests and organizations after considering their requests and recovered this land if they could not use their lands recovered this land if they could not use their lands properly. land had no price.properly. land had no price.The land administration system had only function of The land administration system had only function of surveying agricultural land areas for calculation of surveying agricultural land areas for calculation of agricultural land tax (major income of the State agricultural land tax (major income of the State budget from land).budget from land).


After 1975 (after wars in Vietnam): After 1975 (after wars in Vietnam): Economic development became the main task of the Economic development became the main task of the State.State.The State-subsidized mechanism had no motive power The State-subsidized mechanism had no motive power for economic development: agricultural cooperatives for economic development: agricultural cooperatives poorly operated, agricultural production dramatically poorly operated, agricultural production dramatically decreased and foodless happened in rural areas; stated-decreased and foodless happened in rural areas; stated-owned enterprises in industry and service sectors had owned enterprises in industry and service sectors had also no effects. also no effects. In 1986: In 1986: The State of Vietnam decided to start the economy The State of Vietnam decided to start the economy renovation policy (Doi Moi), based on the operation of the renovation policy (Doi Moi), based on the operation of the market economy under the state management (the market economy under the state management (the market economy system is recognized as the major market economy system is recognized as the major driving force for economic development).driving force for economic development).In 1994:In 1994:The State of Vietnam decided to start the The State of Vietnam decided to start the industrialization and modernization of country based on industrialization and modernization of country based on the construction of Vietnam to become a industrial the construction of Vietnam to become a industrial country in about 2015.country in about 2015.


From 1986 to now: From 1986 to now: Land becomes the important input for economic Land becomes the important input for economic development in the market economy mechanism.development in the market economy mechanism.Land policies are the turn points in the renovation Land policies are the turn points in the renovation process: the renovated policies for agriculture land has process: the renovated policies for agriculture land has made Vietnam to become one of the three leading made Vietnam to become one of the three leading countries in rice export, the renovated policies for non-countries in rice export, the renovated policies for non-agriculture land has facilitated the industrialization agriculture land has facilitated the industrialization process and set up the active real estate market to process and set up the active real estate market to ensure the stability of annual economic growth. ensure the stability of annual economic growth. The legal system on land was established: the first The legal system on land was established: the first Land Law issued in 1987, the second Land Law issued in Land Law issued in 1987, the second Land Law issued in 1993 (with the first amendment in 1998 and the second 1993 (with the first amendment in 1998 and the second amendment in 2002), the third Land Law issued in 2003 amendment in 2002), the third Land Law issued in 2003 (will be amended in 2008), and a Land Code will be (will be amended in 2008), and a Land Code will be issued in the period 2011 - 2015 as planned. issued in the period 2011 - 2015 as planned. The land administration system was reconstructed in The land administration system was reconstructed in all the administrative levels (governmental, provincial, all the administrative levels (governmental, provincial, district, communal).district, communal).

II. II. THE RENOVATED POLICY OF LAND THE RENOVATED POLICY OF LAND FOR AGRICULTURE DEVELOPMENT FOR AGRICULTURE DEVELOPMENT (1)(1)During 1975-1980During 1975-1980: the average food production of : the average food production of

Vietnam was only about 13.5 million tons/year. Vietnam was only about 13.5 million tons/year. During 1981-1985During 1981-1985: the food production slightly : the food production slightly increased to 16.5 million tons/year. increased to 16.5 million tons/year. In 1986In 1986: The State of Vietnam carried out the country : The State of Vietnam carried out the country renovation process - 'Doi Moi' with the breakthrough renovation process - 'Doi Moi' with the breakthrough in land policies - agricultural cooperatives’ lands were in land policies - agricultural cooperatives’ lands were allocated to households for stable permanent uses, allocated to households for stable permanent uses, creating a new motive for agriculture production. creating a new motive for agriculture production. The first Land Law (1987) The first Land Law (1987) was focused on the process was focused on the process of land allocation to households as stable land users of land allocation to households as stable land users and issued the land use right certificate (LURC) to land and issued the land use right certificate (LURC) to land users as the legal basis for land use. The agriculture users as the legal basis for land use. The agriculture land users started to enjoy land use rights and made land users started to enjoy land use rights and made the better investment for own land parcels. The new the better investment for own land parcels. The new policy had a profound effect in raising agricultural policy had a profound effect in raising agricultural production and productivity, mostly rice production.production and productivity, mostly rice production.

II. II. THE RENOVATED POLICY OF LAND THE RENOVATED POLICY OF LAND FOR AGRICULTURE DEVELOPMENT FOR AGRICULTURE DEVELOPMENT (2)(2)

The second Land Law (1993) The second Land Law (1993) showed 3 typical renovated as follows: showed 3 typical renovated as follows:

1.1.The State concedes the price of land, and it was defined by the The State concedes the price of land, and it was defined by the State; State;

2.2.The Land Use Rights could be legally transferred, exchanged, The Land Use Rights could be legally transferred, exchanged, leased, mortgaged and inherited. leased, mortgaged and inherited. Some typical successes of Land Law 1993 Some typical successes of Land Law 1993 implementation were: implementation were:

1.1.The agriculture land consolidation process implemented very well The agriculture land consolidation process implemented very well (the land users had a smaller number of land parcels with larger (the land users had a smaller number of land parcels with larger area of each); area of each);

2.2.Many farms built by household or multi-household on agriculture, Many farms built by household or multi-household on agriculture, aquaculture, forestry with agricultural products processing; aquaculture, forestry with agricultural products processing;

3.3.A part of agricultural labour force in rural areas moved to non-A part of agricultural labour force in rural areas moved to non-agricultural sectors such as mechanical services, irrigation, agricultural sectors such as mechanical services, irrigation, electrical supply, transportation, pesticides supply, etc.; electrical supply, transportation, pesticides supply, etc.;

4.4.The most of households got money to invest into agricultural The most of households got money to invest into agricultural production by mortgaging their land use right to borrow money from production by mortgaging their land use right to borrow money from banks.banks.

5.5.Land use right has been legally accepted on the market Land use right has been legally accepted on the market transaction. transaction.


The Land Law 1993 showed 3 main shortcomings The Land Law 1993 showed 3 main shortcomings as follows: as follows: 1.1.The land price assigned by the State is usually The land price assigned by the State is usually much lower than the market price, making the land much lower than the market price, making the land price “ask-give” mechanism continue to persist. price “ask-give” mechanism continue to persist. 2.2. More than 50% of agricultural farms are More than 50% of agricultural farms are established by rich people in urban areas through established by rich people in urban areas through the land transfer from poor households in rural the land transfer from poor households in rural areas; the number of poor people that have no areas; the number of poor people that have no production land increases more and more in rural production land increases more and more in rural areas.areas.3.3.Vietnam started its industrialization process Vietnam started its industrialization process since 1994, but Land Law 1993 did not focus on since 1994, but Land Law 1993 did not focus on managing non-agricultural lands and land managing non-agricultural lands and land conversion process from the agriculture sector to conversion process from the agriculture sector to non-agriculture sector. non-agriculture sector.


The renovated policies for agriculture land has The renovated policies for agriculture land has become the main force to improve agricultural become the main force to improve agricultural production and productivityproduction and productivity. in 1990, Vietnam has . in 1990, Vietnam has become one of the 3 biggest rice exporting countries become one of the 3 biggest rice exporting countries in the world, and to date, it is amongst the top in the world, and to date, it is amongst the top countries in exporting agricultural products such as countries in exporting agricultural products such as coffee bean, peppercorn, shrimp, fish, etc.coffee bean, peppercorn, shrimp, fish, etc. Rice production/productivity of Vietnam in comparison with ThailandRice production/productivity of Vietnam in comparison with Thailand::

YearYear 19911991 19921992 19931993 19941994 19951995 19961996 19971997

Rice Production (million tons)Vietna

m 19.619.6 21.521.5 22.822.8 23.523.5 24.924.9 26.426.4 27.627.6Thailan

d 19.819.8 20.220.2 19.119.1 19.719.7 19.019.0 20.020.0 19.819.8

Rice Productivity (100kg/ha)Vietnam

31.131.1 33.333.3 34.834.8 35.635.6 36.836.8 37.737.7 39.039.0

Thailand

20.5220.52 19.5819.58 21.2821.28 21.121.1 21.321.3 21.221.2 21.021.0

III. III. THE RENOVATED POLICY OF LAND THE RENOVATED POLICY OF LAND FOR COUNTRY'S INDUSTRIALIZATION FOR COUNTRY'S INDUSTRIALIZATION (1)(1)One year after the birth of the Land Law 1993, One year after the birth of the Land Law 1993,

Vietnam set out a roadmap of country’s Vietnam set out a roadmap of country’s industrialization and modernization to the year industrialization and modernization to the year 2000. 2000. This induced a series of land issuesThis induced a series of land issues such as: such as:1.1.How to make more land available for the projects How to make more land available for the projects of basic infrastructure development, industrial of basic infrastructure development, industrial zones building, and new urban areas construction?zones building, and new urban areas construction?2.2.How to satisfactorily compensate, resettle and How to satisfactorily compensate, resettle and create new jobs for the farmers whose lands were create new jobs for the farmers whose lands were recovered to implement non-agricultural recovered to implement non-agricultural development projects?development projects?3.3.How to settle land disputes and complaints?How to settle land disputes and complaints?4.4.How to deal with environmental pollution caused How to deal with environmental pollution caused by non-agricultural projects?by non-agricultural projects?5.5.How to develop the real estate market properly?How to develop the real estate market properly?Meanwhile, land management authorities lacked of Meanwhile, land management authorities lacked of a legal corridor to deal with these issues in a legal corridor to deal with these issues in practice. practice.

III. III. THE RENOVATED POLICY OF LAND THE RENOVATED POLICY OF LAND FOR COUNTRY'S INDUSTRIALIZATION FOR COUNTRY'S INDUSTRIALIZATION (2)(2)

To set up the legal tools for land To set up the legal tools for land administration, administration, the land management the land management authorities made the following activities:authorities made the following activities: 1.1.The Government promulgated a number of The Government promulgated a number of decrees to managed non-agricultural land uses. decrees to managed non-agricultural land uses. 2.2.The Standing Committee of National Assembly The Standing Committee of National Assembly also promulgated two ordinances on rights and also promulgated two ordinances on rights and obligations of domestic organizations using obligations of domestic organizations using land and of foreign organizations and land and of foreign organizations and individuals renting land in Vietnam. individuals renting land in Vietnam. 3. The National Assembly amended and 3. The National Assembly amended and supplemented the Land Law in 1998 based on supplemented the Land Law in 1998 based on these ordinances and decrees, and in 2001 these ordinances and decrees, and in 2001 respecting to decentralization of land respecting to decentralization of land administration. administration.

III. III. THE RENOVATED POLICY OF LAND THE RENOVATED POLICY OF LAND FOR COUNTRY'S INDUSTRIALIZATION FOR COUNTRY'S INDUSTRIALIZATION (3)(3)During ten years 1993 - 2003 of implementation, the land During ten years 1993 - 2003 of implementation, the land

legislation exerted positive impacts promoting the country’s legislation exerted positive impacts promoting the country’s industrialization, but industrialization, but these land policies still have several these land policies still have several shortcomings shortcomings as the follows:as the follows:1.1.Land prices defined by the State were much lower than that on Land prices defined by the State were much lower than that on the market (normally around 1/10 of market prices). Virtually, the the market (normally around 1/10 of market prices). Virtually, the State has continued to subsidize land prices, thus intensified the State has continued to subsidize land prices, thus intensified the corruption in land management and speculation in land use.corruption in land management and speculation in land use.2.2.Real estate market could not develop since economic Real estate market could not develop since economic organizations were kept out of land transaction, because, organizations were kept out of land transaction, because, enterprises had only land leasehold right from the State (land enterprises had only land leasehold right from the State (land leased by the State), but did not have land freehold right from the leased by the State), but did not have land freehold right from the State (land allocated by the State). Up to 1998, enterprises have State (land allocated by the State). Up to 1998, enterprises have been allocated with land in an indefinite period of use time either been allocated with land in an indefinite period of use time either to construct dwelling house for sale/lease, and to get back their to construct dwelling house for sale/lease, and to get back their investment in infrastructure.investment in infrastructure.3.3.The State gave its enterprises excessive favours such as The State gave its enterprises excessive favours such as allowing these enterprises to used land leased by the State as allowing these enterprises to used land leased by the State as their own properties for capital contribution in joint venture with their own properties for capital contribution in joint venture with foreign investors.foreign investors.

III. III. THE RENOVATED POLICY OF LAND THE RENOVATED POLICY OF LAND FOR COUNTRY'S INDUSTRIALIZATION FOR COUNTRY'S INDUSTRIALIZATION (4)(4)4. The State allowed implementing 'exchanging land for infrastructure' mechanism based on the mechanism that investors have to invest in technical infrastructure, and the State will allocate land parcels for residential or production use with value equal to the invested infrastructure. This mechanism supported to use land as the capital for investment but unfortunately, the State caused huge loss to itself by setting a very low price of land, and helped investors to gain 'super' benefits from land.

5. There were big obstacles in practice when the State recovered lands to lease or allocate to investment projects: (i) land prices stipulated by the State were much lower than the market prices, making users of recovered land to protest against value of land compensation and raising land complaints; (ii) many investors unfairly made benefits from this mechanism by setting up 'fake' projects to arrogate lands from other people; and (iii) many managers made corrupt use of their authorized competence recovering land to use for their own.

6. Administrative procedures for land recovery, land allocation, land lease were not clear, complicated, burdensome and inappropriate with land use in practice.

7. Land corruption, by this way, became more and more serious.


In 2001, the State started to implement the project In 2001, the State started to implement the project 'Summarizing 10 years implementing land legislation and 'Summarizing 10 years implementing land legislation and land policies' to put forward new land policies thus creating land policies' to put forward new land policies thus creating new dynamics for the country’s industrialization and new dynamics for the country’s industrialization and modernization. As a result, the third Land Law was adopted modernization. As a result, the third Land Law was adopted by the National Assembly at the end of 2003 and came into by the National Assembly at the end of 2003 and came into force on July 1force on July 1stst 2004. 2004.

The Land Law (2003) puts forward a number of new policies The Land Law (2003) puts forward a number of new policies on landon land as the follows: as the follows:

1.1.It clearly defines a legal framework for people’s ownership It clearly defines a legal framework for people’s ownership regime on land, and specifies the State’s decision making regime on land, and specifies the State’s decision making authority on land use planning (the State determines land authority on land use planning (the State determines land use purpose), on land recovery, allocation and lease for the use purpose), on land recovery, allocation and lease for the projects using land which aimed at preserving national projects using land which aimed at preserving national interests, community interests, national defense, security interests, community interests, national defense, security and some kinds of projects for economic development; the and some kinds of projects for economic development; the State gives land users the rights of land exchange, transfer, State gives land users the rights of land exchange, transfer, donation, inherit, mortgage, and land contribution as donation, inherit, mortgage, and land contribution as capital.capital.


2.2.It provides specific regulations to solve complicated, It provides specific regulations to solve complicated, historical induced land issues, principally by no historical induced land issues, principally by no reconsideration of all the pre-existent administrative reconsideration of all the pre-existent administrative decisions but reviewing civilian relationships on land such decisions but reviewing civilian relationships on land such as land lend, land lease, house care offer, etc. to make as land lend, land lease, house care offer, etc. to make proper judgment in accordance with the Civil Code.proper judgment in accordance with the Civil Code.

3.3.It fully renovates land financial systems based on 'one It fully renovates land financial systems based on 'one price of land' principle (State-defined price of land is equal price of land' principle (State-defined price of land is equal to the market price of land).to the market price of land).

4.4.It eliminates land favours given to State-owned It eliminates land favours given to State-owned enterprises, makes up equality on land use between the enterprises, makes up equality on land use between the domestic enterprises from different economic sectors, and domestic enterprises from different economic sectors, and makes up also economical equality between the domestic makes up also economical equality between the domestic investors and foreign investors. investors and foreign investors.

5.5.Land parcels are put under the direct management of local Land parcels are put under the direct management of local authorities, the central authority is in charge of the land authorities, the central authority is in charge of the land legislation construction and land use planning of whole legislation construction and land use planning of whole country & provinces. country & provinces.


6.6.Land mortgage is encouraged, and land mortgage Land mortgage is encouraged, and land mortgage registration procedure is simplified (however, land users registration procedure is simplified (however, land users can not mortgage land to foreign banking organizations). can not mortgage land to foreign banking organizations).

7.7.Land use planning is improved to be more appropriate Land use planning is improved to be more appropriate with the market mechanism and to assure social, with the market mechanism and to assure social, economic and environmental benefits (however, it is lack economic and environmental benefits (however, it is lack of feasibility).of feasibility).

8.8.It restricts the State’s authority in land recovery for It restricts the State’s authority in land recovery for economic development projects. The State has the right economic development projects. The State has the right to recover land only for the development projects of to recover land only for the development projects of urban area, industrial zones, economic zones, high urban area, industrial zones, economic zones, high technology zones; for the invested projects with the 100% technology zones; for the invested projects with the 100% foreign direct investment; and for the industrial-servicing foreign direct investment; and for the industrial-servicing production projects with the domestic investment at high production projects with the domestic investment at high level, otherwise investors must directly get land by level, otherwise investors must directly get land by transfer, by rent or by land contribution as capital. transfer, by rent or by land contribution as capital.


9.9.It fully renovates the mechanism of compensation, support, It fully renovates the mechanism of compensation, support, and resettlement for the people whose land recovered by the and resettlement for the people whose land recovered by the State: compensation by land is prioritized over compensation State: compensation by land is prioritized over compensation by money, and if compensation by money is applied, by money, and if compensation by money is applied, compensation amount will be based on the market price of compensation amount will be based on the market price of land; farmers whose land area is recovered over 30% of their land; farmers whose land area is recovered over 30% of their agricultural land would have compensation by non-agricultural land would have compensation by non-agricultural land and free training for new jobs; people agricultural land and free training for new jobs; people whose residential land is recovered would be resettled at whose residential land is recovered would be resettled at sites with better living conditions.sites with better living conditions.

10.10.It fully renovates whole the land administration based on: It fully renovates whole the land administration based on: (i) moving a big part of the administrative works to land (i) moving a big part of the administrative works to land registration system operated by the Land Registration Office registration system operated by the Land Registration Office (public service organization), (ii) providing specific (public service organization), (ii) providing specific regulations to promote transparency of land use registration regulations to promote transparency of land use registration in LURC issuing procedure, in land transaction procedure, (iii) in LURC issuing procedure, in land transaction procedure, (iii) apply administrative penalties to State officials who broke apply administrative penalties to State officials who broke the laws or harassed people/organizations at administrative the laws or harassed people/organizations at administrative works. works.


11.11.It renovates settlement mechanism of land disputes, It renovates settlement mechanism of land disputes, land complaints on administrative decisions, and land complaints on administrative decisions, and denouncements on land corruption based on principles denouncements on land corruption based on principles that procedures must be transparent, time-limit must that procedures must be transparent, time-limit must be fixed, authorities and responsibilities must be be fixed, authorities and responsibilities must be specific, and results must be publicized.specific, and results must be publicized.

The above mentioned land policies positively The above mentioned land policies positively impacted on the speed up in the country’s impacted on the speed up in the country’s industrialization and modernization. Domestic industrialization and modernization. Domestic and foreign investments significantly and foreign investments significantly increased. The real estate market rapidly increased. The real estate market rapidly expanded and had higher proportion in the expanded and had higher proportion in the economy. More industrial zones, economic economy. More industrial zones, economic zones, high technology zones, new urban zones, high technology zones, new urban areas are constructed throughout the country. areas are constructed throughout the country.


Investment by ownership in the period of 2003 - 2006 Investment by ownership in the period of 2003 - 2006 (million USD)(million USD)

The above table indicates that total investment in Vietnam in the period of The above table indicates that total investment in Vietnam in the period of 2003-2006 slightly increased year by year, wherein State sector’s 2003-2006 slightly increased year by year, wherein State sector’s investment increased, non-State domestic sectors’ investment decreased, investment increased, non-State domestic sectors’ investment decreased, and foreign direct investment (FDI) significantly increased. One can say and foreign direct investment (FDI) significantly increased. One can say that eliminating the “ask-give” mechanism in land does not satisfy the that eliminating the “ask-give” mechanism in land does not satisfy the non-State domestic investors, creating equality in rights and obligations on non-State domestic investors, creating equality in rights and obligations on land between domestic and foreign investors satisfies strongly the foreign land between domestic and foreign investors satisfies strongly the foreign direct investors.direct investors.

Investment in Vietnam in the

period of 2003 - 2006

Total Investment

Investment from State

owned sector

Investment from non-

State (domestic)

sectors

Foreign Direct

Investment (FDI)

20032003 14,953 7,910 4,649 2,39420042004 18,183 8,739 6,860 2,584

2004 - 20032004 - 2003 +3,230 +830 +2,210 +19020052005 21,446 10,102 8,150 3,194

2005 - 20042005 - 2004 +3,263 +1,363 +1,290 +61020062006 24,931 11,569 9,406 3,956

2006 - 20052006 - 2005 +3,485 +1,467 +1,256 +762


Structure of GDP by economic sectors in the period of 2003 - 2006 Structure of GDP by economic sectors in the period of 2003 - 2006 (million USD)(million USD)

Structure of GDP by economic sectors shows that Vietnam’s Structure of GDP by economic sectors shows that Vietnam’s economy development has recently moved towards an economy development has recently moved towards an industrialized country with industry’s contribution of over 40%, industrialized country with industry’s contribution of over 40%, service’s contribution of over 40% and agriculture’s contribution service’s contribution of over 40% and agriculture’s contribution of around 19%. of around 19%.

20032003 20042004 20052005 20062006

AMOUNTAMOUNT %% AMOUNTAMOUNT %% 2004-2004-20032003 AMOUNTAMOUNT %% 2005-2005-

20042004 AMOUNTAMOUNT %% 2006-2006-20052005

TOTALTOTAL 21,015 22,652 +1,637 24,564 +1,912 26,571 +2,007

AgricultureAgriculture 4,427 21.1 4,620 20.4 +193 4,806 19.6 +186 4,969 18.7 +163

IndustryIndustry 8,087 38.5 8,914 39.4 +827 9,867 40.2 +953 10,890 41.0 +1,023

ServicesServices 8,501 40.5 9,119 40.3 +618 9,892 40.3 +773 10,712 40.3 +820


Structure of GDP by economic sectors in the period of 2003 - 2006 Structure of GDP by economic sectors in the period of 2003 - 2006 (million USD)(million USD)

Structure of GDP by ownerships shows that State sector’s Structure of GDP by ownerships shows that State sector’s contribution is of about 40% and slightly decreasing, non-State contribution is of about 40% and slightly decreasing, non-State sector’s contribution is of about 47% and increasing, foreign sector’s contribution is of about 47% and increasing, foreign direct investment’s contribution is of only about 12% and direct investment’s contribution is of only about 12% and significantly increasing. It is concluded that the land policies significantly increasing. It is concluded that the land policies renovation has accelerated the country’s industrialization.renovation has accelerated the country’s industrialization.

20032003 20042004 20052005 20062006

AMOUNTAMOUNT %% AMOUNTAMOUNT %% 2004-2004-20032003 AMOUNTAMOUNT %% 2005-2005-

20042004 AMOUNTAMOUNT %% 2006-2006-20052005

TOTALTOTAL 21,015 22,652 +1,637 24,564 +1,912 26,571 +2,007

STATE STATE SECTOR SECTOR

8,635 41.1 9,304 41.1 +669 9,990 40.7 +686 10,625 40.0 +635

NON-STATE NON-STATE SECTORSECTOR

10,031 47.7 10,729 47.4 +698 11,609 47.3 +880 1,265 47.3 +956

FOREIGN FOREIGN INVESTMENINVESTMENTT

2,349 11.2 2,619 11.6 +270 2,966 12.1 +347 3,381 12.7 +415


Development and implementation of the legislation system Development and implementation of the legislation system on land still be challenged by the following issues:on land still be challenged by the following issues:

1.1.The renovation of the four above mentioned land The renovation of the four above mentioned land management tools was asynchronous: the land management tools was asynchronous: the land legislation system and land administration system were legislation system and land administration system were rapidly improved but not land finance system. To date, rapidly improved but not land finance system. To date, non-agricultural land use taxation has no changes non-agricultural land use taxation has no changes compared to that of the state-subsidized economy, and compared to that of the state-subsidized economy, and the land use planning system has not been developed the land use planning system has not been developed conformably with the market economy mechanism.conformably with the market economy mechanism.

2.2.Land policies and land legislation have always been Land policies and land legislation have always been developed in accordance with the country sustainable developed in accordance with the country sustainable development direction. However, the real estate development direction. However, the real estate development policies and legislation are not synchronous development policies and legislation are not synchronous themselves, there is a lot of the legal conflicts, causing themselves, there is a lot of the legal conflicts, causing difficulties in applying these laws and policies in difficulties in applying these laws and policies in practice. practice.


3.3.In the land legislation system, there are some differences in In the land legislation system, there are some differences in the rights and obligations on land between foreign investors the rights and obligations on land between foreign investors and domestic investors. These differences must be adjusted and domestic investors. These differences must be adjusted to be in accordance with Vietnam’s commitments joining the to be in accordance with Vietnam’s commitments joining the WTO.WTO.

4.4.Land use planning system is inflexible, not conformable to Land use planning system is inflexible, not conformable to the market mechanism, and lacks of a specific quantification the market mechanism, and lacks of a specific quantification measure to assess its effectiveness in social, economic and measure to assess its effectiveness in social, economic and environmental aspects. It is popular that land use planning environmental aspects. It is popular that land use planning and construction planning and socio-economic development and construction planning and socio-economic development planning are not synchronously developed. planning are not synchronously developed.

5.5.The State controlled land prices still somewhat differ to the The State controlled land prices still somewhat differ to the market prices (land use fee is about 70% of market price of market prices (land use fee is about 70% of market price of land, State’s land rental payment is only about 30% of land, State’s land rental payment is only about 30% of market rental price of land), while there is no legal corridor market rental price of land), while there is no legal corridor for the land valuation activities. The land price disparity for the land valuation activities. The land price disparity keeps raising the land complaints, land disputes and existing keeps raising the land complaints, land disputes and existing of the “ask-give” mechanism in land. of the “ask-give” mechanism in land.


6.6.Tax posed to land transfer is 28% of income for enterprises Tax posed to land transfer is 28% of income for enterprises (from 2003) and 25% for individuals (from 2009). Tax posed (from 2003) and 25% for individuals (from 2009). Tax posed to agricultural land use is waived for land area under land to agricultural land use is waived for land area under land use area limit, and deducted for land area over land use use area limit, and deducted for land area over land use area limit. However, tax posed to non-agricultural land use area limit. However, tax posed to non-agricultural land use with attached properties has not been adjusted accordingly with attached properties has not been adjusted accordingly ; the current non-agricultural land use tax (no tax for ; the current non-agricultural land use tax (no tax for attached properties) for lands of highest price is as low as attached properties) for lands of highest price is as low as 1.6 kg rice/1m1.6 kg rice/1m22/year. This taxation for non-agricultural land /year. This taxation for non-agricultural land with attached properties has lead to land speculation.with attached properties has lead to land speculation.

7.7.The land administration system was thoroughly renovated The land administration system was thoroughly renovated towards enhancing transparency, publicity and simplicity to towards enhancing transparency, publicity and simplicity to encourage public registration of land transactions and encourage public registration of land transactions and reduce corruption in land management. However, local reduce corruption in land management. However, local authorities do not strictly observe these renovations; land authorities do not strictly observe these renovations; land use certificate issuing and land transaction registration use certificate issuing and land transaction registration have not been transparent, while corruption in land have not been transparent, while corruption in land management is not eliminated.management is not eliminated.

IV. IV. CONCLUSIONS (1)CONCLUSIONS (1)

1.1. land policies and legislation have become the turn land policies and legislation have become the turn points in the country’s renovation and a main motive points in the country’s renovation and a main motive force for agricultural and rural development. Presently, force for agricultural and rural development. Presently, land laws and policies play an important role in the land laws and policies play an important role in the country’s industrialization and modernization. country’s industrialization and modernization. However, the current policies on land still have many However, the current policies on land still have many shortcomings which could negatively affect the shortcomings which could negatively affect the sustainable development. Policies on land finance have sustainable development. Policies on land finance have been insufficient to eliminate weaknesses in land been insufficient to eliminate weaknesses in land management such as land corruption and speculation, management such as land corruption and speculation, and unreasonable compensation for land recovery. and unreasonable compensation for land recovery. Land use planning has not harmonized economic Land use planning has not harmonized economic development, social development and environmental development, social development and environmental protection. Land administration system has not yet protection. Land administration system has not yet provided transparent civilian relationships between the provided transparent civilian relationships between the State and land users and between the land users.State and land users and between the land users.

IV. IV. CONCLUSIONS (2)CONCLUSIONS (2)

2.2. At the end of 2007, a new 'hot fever of land-house' At the end of 2007, a new 'hot fever of land-house' started to raise in big cities of Vietnam, making land started to raise in big cities of Vietnam, making land prices in Hanoi and Ho Chi Minh city to go on top of the prices in Hanoi and Ho Chi Minh city to go on top of the world while the average income per capita is still in world while the average income per capita is still in bottom group of the world. This 'land fever' is expected bottom group of the world. This 'land fever' is expected to flare up since there is a big 'virtual demand' from to flare up since there is a big 'virtual demand' from land speculation. Dwelling house construction and land speculation. Dwelling house construction and commerce is bringing 'super' profits to investors, thus commerce is bringing 'super' profits to investors, thus attracting huge investments into the land-house attracting huge investments into the land-house market. In 2006, the economic growth of Viet Nam is market. In 2006, the economic growth of Viet Nam is 8,17% with the inflation of 6,60%, and in 2007, the 8,17% with the inflation of 6,60%, and in 2007, the economic growth is 8,48% but the inflation is 12,63%. economic growth is 8,48% but the inflation is 12,63%. The 'hot fever of land-house' is one of the main reasons The 'hot fever of land-house' is one of the main reasons to increase the current inflation. An economic disaster to increase the current inflation. An economic disaster will happen if the real estates market’s over-blow is not will happen if the real estates market’s over-blow is not timely prevented.timely prevented.

Prof. Dr.Sc. Dang Hung Vo M.Sc. Do Duc Doi Ministry of Natural Resources & Environment of Vietnam.

Documents

land law

land code

land administration

state of vietnam

process of land allocation

nonagriculture land

state allocated land

stable land users