More and more businesses are now renting houses or apartments as office space because of a shortage of business premises, paying top dollar for just a small area. “This makes it difficult for these enterprises to expand,” Dr Tran Quang Huy, a lecturer at the Hanoi Law University, told a recent seminar reviewing the Land Law that took place in late September.
Having sufficient space for business is an important factor in implementing the right of economic entities regarding freedom of business, as recognised in the Constitution. “However, the need of businesses to be allocated land or be able to lease land is not met because land resources are limited, and businesses also must face a number of obstacles and cumbersome administrative procedures,” Dr Huy added.
Overlaps in the country’s legal framework also create difficulties for investors during the implementation of land-related projects. Mr Bui Viet Anh, Head of international lawyers Binh An, told VET that the Land Law 2003 regulates that the State will allocate land to economic organisations, households, and individuals for stable and long-term use free of charge or at a certain rental price.
But the State only allows foreign organisations and individuals to lease land. In the Investment Law, however, there is a provision that regulates that the State will treat investors in all economic sectors equally before the law. “Applying the Investment Law’s provisions would violate the Land Law’s provisions and vice-versa,” he noted.
In addition, foreign investors can only put up their land use rights as collateral with credit institutions licensed to operate in Vietnam. “This creates difficulties for them in raising capital,” Mr Anh said. “And promoting their land use rights will also be limited.”
Another aspect relating to foreign property ownership rights is that foreign organisations and individuals living and working in Vietnam only have the right to buy an apartment, not a house. Ms Nguyen Thi Thu Nga, Deputy Head of the Legal and Internal Control Department at the Vinaconex Corporation, told the seminar that the regulations are too strict and are inappropriate.
“Foreigners in Vietnam actually have a major need to purchase a house,” she added. “There would be no security issues if they were permitted to do so.” She explained that land is the State’s property and the State has right to repurchase these houses at a specified price under certain circumstances. “Lawmakers and authorities should allow them to buy houses in Vietnam,” she said.
Many experts believe that the Land Law needs to be amended. Specifically, after securing land use rights, domestic investors and foreign investors should be equal in relation to land use rights and obligations. “Rights and obligations differ only when land users select different land use forms,” Dr Huy said.
Where land users use the same land use form, they have the same rights and obligations regardless of whether they are domestic investors or foreign investors. “This means that lawmakers should design legislation that includes provisions on land users’ rights and the form of annual lease payments or lump-sum payment for all investors,” he added. “The State should allow domestic economic organisations to choose the lump-sum payment form, like foreign investors, and allow foreign investors to be allocated land, like their domestic counterparts, to create an equal playing field for all investors.”
With a similar view to Dr Huy, lawyer Do Trong Hai, Chairman of the Bizlink law firm, noted that it’s time for the State to carefully research and consider improving leased land use rights, rather than tightening the transfer of land use rights on the market. “The State also should study the transparency of land allocation and land leasing,” he said.
According to Mr Hai, land ownership diversification should be given greater emphasis. “Most countries recognise private land ownership but not Vietnam,” he said. “But on matters relating to national security, the State retains the right to make decisions.”
If private property ownership was recognised, he believes, authorities would solve a number of problems relating to land use, including the provision of business premises for enterprises. “Specifically, if the State recognised private land ownership and allowed users to transfer land to others in need, land management would also be more transparent,” he said.
Regarding the private land ownership issue, Dr Pham Si Liem, Deputy Chairman of the Vietnam Federation of Civil Engineering Associations, told VET that there would be unpredictable consequences if the State was to recognise private land ownership. “Whoever was to present such a proposal would have to work out a strict framework for implementation,” he said. “It is easy for the State to change public ownership into private ownership, but it would be difficult for it to then change private ownership back into public ownership.”
Diversification of land ownership could result in a wave of land litigation and create instability. It would be difficult to control and would affect the interests of land users allocated or leasing land by the State and also have an adverse impact on society.
Any empowerment of foreign economic organisations must be considered with issues of national security and economic development. Dr Doan Hong Nhung, a lecturer at the Faculty of Law at the Hanoi National University, disagreed with the view that domestic and foreign should be treated equally as regards land issues. “The State should maintain a policy of protecting land for domestic enterprises,” she said.
“Otherwise the ‘favourable’ locations will be held by foreign companies, who have better technologies and stronger financial resources.” she said. The State also allows enterprises to use land use rights as collateral at credit institutions operating in Vietnam.
“However, foreign credit institutions would be reluctant to recognise land use rights as collateral because land belongs to the State, meaning enterprises would have difficulties in raising capital,” she said.
Land ownership continues to be a pressing issue and the State requires more time and effort to conduct research and introduce appropriate legal amendments where deemed necessary.