Overcoming mistakes when implementing ‘exchanging land for infrastructure’

	A sweet home for mighty investors
	Adjusting policy will bring land prices closer to the market
	Many localities delay approving land use plans for agricultural and forestry companies

The Government has scrutiny to ensure strict, lawful and non-retroactive, and must harmonize the interests of the parties.

Need to address practical shortcomings

According to a review bythe Ministry of Finance, in the past, most BT projects selected investors in the form of contractor designation, while the payment to investors was made by paying them the liberated land fund without going through an auction of land use rights. Many congressmendisagreed withthis situation, so the National Assembly had to send supervisory delegations to investigate the reality of urban land planning, management and use. At the 7th Parliament’s meeting in mid-2019, most of the National Assembly delegates said that the mechanism for determining land prices for calculating compensation is currently not close to market prices (including BT projects), whichis the main cause of pressing, prolonged complaints and budget losses.

Representative Hoang Quang Ham (PhuTho) stated: The policy to implement the project of construction investment in the form of BT is still inadequate, such as determining the land use rights of the land fund paid to investors. It is not clear onthe method and time of determination. Most BT projects that appoint contractors or pay contractors in the form of land allocation haveloopholes. According to Ham, the lack of such policies has led to difficulties in managing and affecting investment, so it is necessary to research and complete themimmediately.

Also expressing his views on this issue, delegate ThachPhuocBinh (TraVinh) mentionedthe fact that among the BT projects assigned to investors for implementation, some projects are behind schedule, some projects have increased capital, some projects have received reciprocal land fund but only focus on subdivision and background sale, not building infrastructure, so the state must do it. Delegate ThachPhuocBinh also said that this stems from the legal framework assigned to BT still having many shortcomings.

According to delegate Ho Thi Kim Ngan (BacKan), it must be frankly acknowledged that this form still has many shortcomings such as determining land fund, the land use value is still unclear about the method and timing of determination. This will result in a difference in the value of the land fund used for payment. Most BT projects choose investors in the form of contractor designation, reducing competition and raising therisk of selecting unqualified investors. The payment to investors in the form of land allocation with land use levy collection or land lease, with one-off rental payment for the entire lease term not through auction is not appropriate with the provisions of the Land Law.

In mid-August 2019, the Prime Minister officially signed the issuance of Decree No. 69/2019 / ND-CP stipulating the use of public assets to pay investors when implementing BT projects. This important decreewill address the inadequacies outlined above.

It is impossible to "build a VND200 billion bridge and hand over VND2,000 billion of land"

The most important content mentioned in Decree 69 is the principle of parity when using public assets to pay investors when implementing BT projects, or in other words, the value of BT projects must be equivalent to the value of payment of public assets. In particular, the value of public assets is determined according to the market price at the time of payment. The BT project value is determined according to the bidding results. The time of payment for theBT project in case of payment by land fund or working office is the time when the provincial People's Committee issues the decision on land allocation or land lease to the investor. The Decree also specifies the determination of the value of payment of land fund and the value of working offices paid to investors.

Speakingabout this issue, La Van Thinh, Director of the Department of Public Administration, Ministry of Finance, said that the payment of BT projects by land fund will follow the principle of price parity. In case the value of the paid land fund is higherthan the value of the BT project, the investor shall pay the difference in cash to the state budget. In case the value of the paid land fund is lowerthan the value of the BT project, the State shall pay the difference to investors in cash or with the land fund at the time the settlement of the BT project is completed.

Concerns about the price difference when the time to determine the exchanged land price are land in remote, un-liberated and low-value locations, but after that, investors benefit dozens, even hundreds of times after land clearance has been thoroughly overcome by Decree No. 69. The decree stipulates that in case the competent state agencies allow the adjustment of land use planning and construction planning according to the provisions of law, resulting in changes in the value of payment land funds, the adjusted land fund shall be determined according to the provisions of law at the time when competent state agencies permit the adjustment of land use planning or construction planning. Decree 69 also stipulates the use of public assets to pay investors when implementing BT projects on the principle of parity, the value of BT projects is equivalent to the value of public assets paid. Thinh gave an example: It is impossible to "make a bridge forVND200 billion but hand over land of VND2,000 billion". The value of public property is determined according to the market price in accordance with the law at the time of payment. The BT project value is determined according to the bidding results. Using public assets to pay to BT investors must be summarized and reflected in the state budget. This is one of the new points compared to the previous regulation. The time of payment in case of payment by land fund or working office is the time when the provincial People's Committee issues the decision on land allocation or land lease to the investor; the time of payment in case of payment with infrastructure assets and other types of public assets is the time when the competent state agency issues a decision to hand over the property to the investor.

In general, the new decree will overcome the "extremely radical" situation of mistakes when implementing the "exchange of land for infrastructure" as recorded in the past, the Director of the Department of Public Administration said.

Decree on BT officially issued: Thoroughly overcoming violations of "changing land for infrastructure"

Commenting on these new regulations, economist Ngo Tri Long said that the new decree issued at this time is very accurate. However, the actual implementation is the need to discuss, in which, it is very difficult to determine the market price. Although there are actually five methods of determining land prices, sometimes there are cases where all five methods cannot determine it. Therefore, from the stage of estimating the project, there must be an evaluation organization, clearly determining the value of the project, and then open bidding. In the long term, it is necessary to amend the Land Law, determine the land price according to the market mechanism to avoid losses of state budget when implementing projects in general and BT projects in particular.