Shortcomings in completing land market

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Land market institutions of our country currently have many limitations and shortcomings. Photo: ST.

Inconsistent with market mechanism

There are many shortcomings in land market institutions. Although the land law system has been revised regularly, some legal documents on land are late and have unclear guiding contents, or are inconsistent with the reality and even with the law, which have not met the requirements of solving problems in practice, making it difficult for the state management of land, said Prof. Dr. Tran Quoc Toan, former Deputy Chairman of the Government Office.

According to the Hanoi Department of Natural Resources and Environment, the city faces five major problems in enforcing Land Law 2013, including land allocation, land lease for investment projects, issuance of certificate, registration for changes in land use rights and ownership of properties attached to land, and and land valuation. In addition, the management of the land-real estate market is still inefficient, creating conditions to generate corruption and negativity in land management such as land acquisition and improper compensation; public land used for wrong purposes, or "sold" at a low price, causing great losses to the state.

Tran Quoc Toan said that land valuation is still inadequate and not consistent with the market mechanism and fails to meet the price requirements. Currently, the price of land stipulated by the State ranges between 30 to 60 percent of the actual transfer price, sometimes it is much lower. A system for monitoring land price in the market has not been fully and effectively organized to serve as a basis for appropriate land valuation.

"This makes the land acquisition and compensation for acquired land prices have inadequacies, causing many complaints," Toan said.

Specifically, the Government disbursement was VND138,156 billion (reaching 37.5% of the plan assigned by the Government). Of which capital construction disbursement was VND112,169 billion (reaching 38.1% plan assigned by the Government); Government bonds disbursement was VND 7,123 billion (reaching 20.4% of the plan assigned by the Government); capital disbursement for the target program and the national target program was VND 18,863 billion (reaching 48.6% of the plan assigned by the Government).

Doan Hong Nhung, Faculty of Law, Hanoi National University, said that the development of the country towards industrialization and modernization, the land acquisition to build urban areas, serving the national interests, public interest and socio-economic development is very necessary, which will increase the value of the land, benefiting the State, investors and farmers whose land is acquired. However, when the benefits between the State, investors and farmers are not allocated in a harmonized manner, disputes related to land acquisition may arise. This leads to complaints about compensation, support, and resettlement, affecting people's livelihoods and rights.

Commenting on the barriers in land conversion in Vietnam, Doan Hong Nhung said that when buying houses, transferring land use rights and properties attached to the land, most people never declare the true transaction value in a contract at a notary office to evade personal income tax of 2 percent of the transfer value. As a result, land transactions are dishonest, which is not adatabaseon land transactions in the area. If the State considers the contract transaction price as compensation to people, that price will not be accepted, prolonging the compensation and site clearance. Meanwhile, the transfer price declaration may increase many times over the real value if people use the land transfer contract to get a mortgage with the bank.

Ensure the principle of harmonization of interests

To overcome weaknesses, inadequacies and proactively develop and perfect the land market institutions in Vietnam towards modernity, transparency and efficiency, making important contributions to the country’s rapid and sustainable development, it is necessary to synchronously implement many solutions suitable to the conditions and development level of Vietnam and approach global trends. It is said that the current land conversion mechanism has not harmonized interests among parties, leading to many disputes and complaints, so the land transfer plan needs to consider the benefit-sharing principle

Sharing experiences of land conversion in countries around the world, Prof. Dang Hung Vo said that in many developed and developing countries, the compulsory land conversion mechanism is only applied for unprofitable and really necessary projects. On the other hand, the voluntary land conversion mechanism is only applied for profitable projects that are not related to national interests, only related to the private interests of investors. In many developing countries, the land conversion for profitable projects related to national interests is carried out in a "neutral" mechanism, which is not compulsory and voluntary. It is a mechanism that the land conversion plan is decided by the consensus of the majority of land users. If 70 percent of land users agree with the land conversion plan, the plan will be approved and the individuals that disagree must accept it. Accordingly, the land conversion plan should pay attention to the benefit-sharing principle to the new land users because the new use of land will be more efficient than the previous use of current land. A part of the benefits from the investment projects must be shared with the citizens whose land is acquired. The benefit-sharing principle needs to be given special attention in cases of land use for the purpose of natural resources exploitation such as investments in hydropower projects or mining projects. This is the experience Vietnam should apply.

Also concerning ensuring benefits in land transfer towards building a complete land market, Doan Hong Nhung said that the law on protecting the rights of farmers whose land is acquired to build urban areas must ensure the interests of the parties that are the State and farmers and investors. The losses should be considered to develop compensation policies that ensure the rights of people whose land is acquired, the State's interests in the distribution of land rent, and the profitability of investors in urban projects due to conversion from agricultural land into urban land. The State needs to have a clear and transparent distribution of profits.

In many proposals on solutions to perfect the land market institutions in Vietnam, Prof. Dr. Tran Quoc Toan mentioned a remarkable solution that is to study, build and synchronise mechanisms and policies and process of planning, land use plans, land valuation and land acquisition decisions, compensation, site clearance, accommodation support and resettlement for people whose land is acquired; and to put acquired land into legal and effective use.

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"These are very complex tasks, but there are still many shortcomings both from the objective and the subjective factors of involved parties. But the principle of fundamental innovation is that the benefits from land must serve the rapid and sustainable development of the country in terms of economy, politics, society and environment; land interests must be harmonized and reasonable among people, investors, enterprises, the state and society,” said Prof. Dr. Tran Quoc Toan.