MoF’s scheme aims to slash land use costs

The proposed land scheme would help foreign invested property projects counter costs from land compensation and resettlement

The new scheme is detailed in two circulars released last week on land use money collection, compensation, support and resettlement.
Under the scheme, “foreign individuals and organisations investing in Vietnam now don’t have to pay resettlement, support and compensation sums for land assigned by the state,” said Huynh Thi Nhan, vice minister of finance.
She said the state would bear responsibility for taking care of land compensation payments and financial supports.
“Foreign individuals and organisations could pay compensation, support and resettlement in advance on behalf of the state, and then the state would subtract gradually from their payment on land use and rental money,” Nhan said.
She said the ruling was aimed at stimulating foreign investment.
“Normally, local authorities would spare their provincial budget for the compensation, support and resettlement, but in some large-sized projects, the central budget could provide support,” she said.
Although many financial experts agreed that the new scheme was a needed measure to attract foreign investment, many feared that the state budget would not be able to cover the increased expenditure.
The deputy general director of a foreign-invested firm in Vietnam, who preferred to remain anonymous, said that in several cases, in order to speed up the pace of investment projects, foreign investors agreed to pay compensation much higher than the price table stipulated.
For some projects, these higher expenses could amount to tens of millions of dollars, he said.
Nhan said the land resettlement, support and compensation price table would be adjusted at the beginning of every year to ensure that it reflected market realities.
“In cases where residents don’t accept the payment price based on the price table regulated by the authorities, there would be administrative disciplinary measures taken against them,” she said.
The circulars also stipulated that in order to create conditions for the further development of the domestic real estate market, the state would only seize land for purposes of national defence, security, national benefits, public benefits, development of industrial zones, export processing zones, high technology, and large projects.
“The state urges investors to persuade the people for permission to conduct a civil transfer or leasing of land use rights or, otherwise, the people could accept their land as a capital contribution to investment projects,” she said.