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New Land Law improves framework

Update: July, 29/2014 - 09:26
Land ownership still remains with the Vietnamese people and is represented and managed by the State. However, foreign investors are now able to undertake transactions involving land on an equal basis with domestic investors.— Photo tinnhanhchungkhoan

HCM CITY  (VNS) — Though the new Land Law has not completely satisfied all involved parties, it ensures more transparent and equitable treatment for land users, property consultancy CBRE said in a report.

"It generally helps to improve the legal framework as well as simplify complex and lengthy procedures," Pham Ngoc Thien Thanh, a senior CBRE analyst, explained.

"Some notable changes address issues of landed property and land recovery – an origin of dispute in the last decade, including land ownership, land recovery, land use rights, and land price."

The new law, ratified last November and coming into force on July 1 of this year, supersedes the 2003 Land Law and has a number of improvements that place local and foreign investors on an equal footing in terms of land acquisition and prices.

It was passed after a consultation process that generated over six million responses from the public.

Land ownership still remains with the Vietnamese people and is represented and managed by the State. However, foreign investors are now able to undertake transactions involving land on an equal basis with domestic investors.

Under the new Law, overseas Vietnamese and foreign-invested enterprises can be allotted land for investment projects for the construction of houses for sale or for a combination of sale and lease. Those who leased land with a full one-off rental payment prior to the effective date of this law may continue using the land with a levy.

"By enabling land allocation to foreign investors, a more competitive business environment is expected, which will help to ensure more efficient land usage," Thanh said.

However, while proposed amendments to the Housing Law will allow foreign investors, particularly overseas Vietnamese, to buy and own houses, the Land Law does not mention benefits for foreign individuals, she said.

Unlike the 2003 Land Law, which had very broad terms such as "economic development purposes", the new law provides more detailed definitions in terms of taking back agricultural lands allotted for commercial projects.

"It is expected that this will help redistribute land to more efficient and financially capable investors, especially for pending ‘golden' sites which have been cleared where there has been no further construction activity," Thanh said.

The law retains the definition for late projects as investment projects inactive for 12 consecutive months, or where the land use schedule is 24 months behind the schedule stated in the project documents.

"The government will be more active in redressing unequal land distribution," Thanh said.

But the law states that in the case of a breach developers will be given a 24-month period to remedy the situation instead of 12 as was the case earlier.

"This will narrow the scope of land recovery by the government, which will consequently affect primary land supply," Thanh said.

After the 24-month grace period land and assets will be withdrawn without any compensation except for force majeure events while under the old law the State had to compensate for investments made in the land, according to the report.

"What the government plans to do with recovered projects or who they will be transferred to still remains in doubt. Finding better investors who have a strong financial position as well as proven track records and commitment may not be an easy task," Thanh said.

According to a study by the World Bank in 2011 tiled Compulsory Land Acquisition and Voluntary land Conversion in Viet Nam, investors' opinions were solicited during various meetings held by the Government.

Problems reached a peak between 2002 and 2004 prior to the passing of the 2003 Land Law.

The Ministry of Natural Resources and Environment received more than 30,000 petitions related to land disputes, complaints, and denouncements between 2003 and 2006. Most of the issues raised were related to land administration procedures – especially land access and the land rights of enterprises.

Problems with land administration procedures eased for a while but have increased again since 2007.

According to the Government Inspectorate of Viet Nam, there were 700,000 lawsuits and complains related to land disputes in the last three years.

Seventy per cent of the suits related to the value of land compensation, financial support and resettlement, according to CBRE figures. — VNS

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