Revision of land law management urged

The laws that regulate land administration are hindering investment in construction projects, particularly in real estate, legal experts have said.

Overlapping and inappropriate regulations regarding investment and construction, coupled with poor management, largely contributed to the ineffectiveness of real-estate investments, Nguyen Viet Hoang of Ha Noi-based Cazpro Law Firm told participants at a workshop held in HCM City on Wednesday.

Another contributing factor was the weak enforcement of administration officers, Hoang said.

Workshop participants discussed several ways to overcome the obstacles involved in leasing and allocating land to real-estate companies.

A survey conducted by the Ministry of Transport in 2008 said construction of investment projects usually takes about three years, reflecting the time needed to fulfil about 33 administrative procedures.

“This is one of the main reasons for Viet Nam’s low ranking on the transparency of its real estate market, especially compared to other countries,” Hoang said.

According to a recent report, Recognising and Reducing Corruption Risks in Land Management in Viet Nam, prepared by the Danish and Swedish embassies and the World Bank, 30 per cent of businesses surveyed said they had to give gifts or informal payments to acquire land-use rights certificates.

During the 2001-10 period, nearly 1 million ha of agricultural land was converted to land for non-agricultural purposes, and more than 5 million ha of unused land (62 per cent of the total unused land in 2000) were converted into land for various purposes.

Although the Land Law, which became effective in 2003, aims at facilitating the development of a land market, there are still impediments to the growth of the land market due to a lack of access to information, according to the Survey Report on Information Disclosure of Land Management Regulations released in November 2010 by the Development and Policy Research Centre.

The Anti-Corruption Law 2005, the IT Law 2006, the Ordinance on Grassroots Democracy 2007, and Project 30 were all enacted to enhance public information, reduce red tape and prevent corruption in public administration.

The Land Law, later elaborated by Decree 84 (2007) and Decree 69 (2009), requires a certain level of transparency in land management.

Authorities at the seminar listened to suggestions on how to improve enforcement of laws and regulations regarding land management and find solutions to make them more practical and effective.

Disagreement on some common issues remains, even though land lease and allocation are regulated by different laws, including Criminal Code, Land Law, Real Estate Business Law, Construction Law, Investment Law and Urban Planning Law, Hoang said.

“Real estate, for example, is defined differently in the Criminal Code and Real Estate Business Law,” said Hoang. “Another example is the disagreement on the land lease and allocation process in legal documents and procedures, which has led to differences in interpretation of who is authorised to recommend the investment site.”

The 2009 Urban Planning Law requires that authorised bodies for urban planning be responsible for selecting and showing the investment sites to potential investors.

However, the Land Law and Decree 69 regulate activities of different authorities who take charge of selecting the investment sites. They are the authorised bodies who process documents on land lease/allocation and investment, respectively.

“Regulations of the same law even overlap,” Hoang said, adding that this must be dealt with properly.

Hoang Van Son, an attorney and manager at HCM City’s Vina Code Law Firm, asked to remove a clause in the Land Law’s elaborating Decree 181, which he said was unnecessary as it gave the administration officer opportunities to make the issuance procedures even more cumbersome for businesses seeking land-use rights certificate.

Son said it was necessary to have a land exchange market where investors and businesses have equal chances to access land.

To make it fair for all investors and minimise corruption risks, Son proposed that the land should not be allocated to the investor by the authorised body.

The deputy head of the Government’s Inspection Research Institute, Nguyen Tuan Khanh, agreed with Son, saying that in many provinces, the allocation, not auction, of land has posed obstacles to the improvement of the investment environment.

Khanh said this should be done as part of the Government’s commitment to join the World Trade Organisation to give investors a fair competition.

For investors, the government’s Decree 198 (2004) which regulates the land-use fee collection is the biggest obstacle for real estate investment.

A real estate investor from HCM City, Nguyen Canh Ha, said his business had to spend 80 per cent of its total investment for ground clearance, compensation, administrative procedures and even smoothing the land in central Nghe An Province.

Under the Decree’s regulations, he had to pay 100 per cent of the land-use price which, he said, should only be applied to investors of public land, who do not have to pay for ground clearance, compensation and administration fees.

The director of An Thien Ly Company Ltd proposed creating a 10-20 per cent fee on the land-use price applied to investors like his business.

The unfairness in allocating land to local and foreign investors was also raised at the workshop, which included experts from the Government’s Inspectorate, Viet Nam Chamber of Commerce and Industry, law firms and businesses.

Nguyen Minh Tam, a representative from HCM City’s Dac Nhan Tam law firm, complained about unfairness in the Land Law, which outlines different rights and obligations for local and foreign investors in approaching and using land.

Local investors can be allocated land by the Government while their foreign counterparts can only rent Government-owned land or land in industrial parks, according to Tam.

Lawyers and investors also voiced their concerns about the unfairness in the land-use fee collection, in which Vietnamese businesses have to pay a land-use fee every year while foreign investors pay only once for a 50-year land lease.

This has made local investors pay a fee that is a thousand times higher than the foreign fee, ever since the regulations were introduced in June last year.

The seminar is part of a programme to increase the capacity of the Government Inspectorate and reduce inappropriate administrative procedures to minimise corruption in land management. — VNS

Tags: Vietnam land law