Land finance expected to improve land use efficiency

November 03, 2022 - 09:58
As land finance and land prices do not accurately reflect the market reality, this has become one of the issues of interest in the report and review of the draft amended Land Law submitted to the National Assembly on Tuesday.
Phan Đức Hiếu, standing member of the Economic Committee of the National Assembly.

As land finance and land prices do not accurately reflect the market reality, this has become one of the issues of interest in the report and review of the draft amended Land Law submitted to the National Assembly on Tuesday.

On the sidelines of the 4th session of the 15th National Assembly, deputy Phan Đức Hiếu, standing member of the Economic Committee of the National Assembly, spoke to Vietnam News Agency about improving financial mechanisms and policies on land to ensure harmony between the interests of the State, land users and investors.

How do you evaluate this draft amended Land Law?

After nearly 10 years implementing the Land Law 2013, the amendment aims to continue renovating and completing institutions and policies as well as improving the effectiveness and efficiency of land management and use.

The amended Land Law is expected to solve "bottlenecks" in the land issue, such as the unstable development of the land use rights market; the administrative reform in land management not meeting actual demand; and land finance and land prices not reflecting market reality.

The most important objective is to ensure the demand for land use in socio-economic development. It also aims to put land resources into production and business and improve social life, thereby creating a driving force for our country to become a high-income developed country in the next 10-20 years.

Land finance is considered a major amendment in this draft. What do you think about this issue?

With the public finance approach, specifically in the land sector, the concept of land finance can be understood as a material obligation related to land use rights. Therefore, this should be considered a tool to improve land use efficiency.

The amended Land Law draft needs to look at this issue more broadly in the direction of promoting the use of this tool to create added value, not only the issue of direct revenue from land transactions and leasing land through the auction of land use rights, and bidding for projects using land.

If we only focus on those issues, there are positive aspects but also potential risks to the economy. For example, an increase in land prices leads to an increase in input costs for production and business, leading to the limited entry of enterprises into the market. Or, only financially capable businesses can access land, causing market distortions.

Meanwhile, the balance between land price and added value from land will ensure harmonisation of interests of the State, land users and investors. If businesses have access to land, they will develop production and business, thereby creating tax revenue and solving labour problems for localities. At this time, finance from land is not only focused on land prices or on increasing direct income from land.

In your opinion, in addition to land finance and land price, how could we promote the role of land in socio-economic development?

To promote the role of land, land planning and use play a particularly important role. This is the basis for allocating land in a scientific and convenient way in socio-economic development.

If the planning is not good and unreasonable, it will become a barrier in resource allocation, thereby creating suspended projects, directly affecting the production and business of enterprises and people's life, as well as indirectly wasting Government resources.

This means the process of land planning and use must be carefully calculated, especially to ensure compatibility in planning among administrative levels and between timeframes. Currently, the planning has national and regional plans, then it is divided into administrative levels and the plans are made at different points of time. This can lead to inconsistent land use planning.

For example, in the case of planning at the same level, plans need to be compatible. The amended Land Law draft should clarify which criteria and conditions determine compatibility in land planning and land use. As long as the planning is not compatible, it will form a bottleneck in the allocation of land resources in particular and socio-economic development in general.

What are your suggestions for the allocation of land resources?

To make land truly a development resource, it is necessary to diversify this resource allocation tool, especially having more regulations to fully develop the land use rights market.

Specifically, the Government should increase space in the land use rights market by adding mechanisms and methods of trading in the market in terms of capital contribution by land use rights, and the mechanism for leasing and subleasing land use rights.

In fact, in the case of capital contribution with the land use right, it means transferring the entire land use right to the enterprise. From a certain angle, it is temporarily "losing land", if the business' operation is not efficient.

In this case, the amended draft Land Law should consider adding a mechanism for granting land use rights but with a term so that the capital contributor has the right to receive the land back after the capital contribution period and continue to use this resource.

In the context of the current market, if the Government only uses the administrative tools such as land withdrawing and allocating orders, it means restricting the transfer of land use rights, reducing the efficiency of land allocation and land use. — VNS