Real estate projects may open to foreigners

Foreigners may be able to sew up access to lucrative real estate projects

Deputy Minister of Natural Resources and Environment Dang Hung Vo told Vietnam Investment Review that the government was considering a decree this month dealing with remaining issues in the land law that would include a proposal to allow the transfer of new urban areas, residential areas and industrial parks and infrastructure to foreign investors.
Current rules require that the assignees of such projects be Vietnamese. As a result, domestic businessmen short of capital to carry out real estate development projects were unable to transfer them to foreign investors armed with cash.
“It the proposal is approved, it will be good for both foreign and domestic investors,” said Vo. “Foreign investors who take assignment of real estate projects will not have to spend time and efforts in finding locations, clearing sites and construction procedures.”
The Ministry of Construction, which drafted a decree on implementation of the Law on Real Estate Business, concurred that this was a hot issues that needed more thought.
The problem with the Ministry of Natural Resources and Environment proposal is how to deal with land use rights. Under current law, foreign investors are allowed to lease land but may not be allocated land use rights.
Vo reasoned that if foreign investors took assignment of an entire real estate project, it would transform the allocation of land use rights into a leasehold. However, the foreign investors would not have to pay rents as they had already paid to take the land use rights from local investors.
Meanwhile, Vo said, Vietnamese who buy houses in these projects would be granted land use rights certificates or home ownership certificates as in other locally-invested projects.
Vo said the expected decree would also deal with land use rights in the cases of joint ventures in which local partners had contributed capital in the form of land use rights were changed into wholly foreign-owned projects.
He said the proposal was a temporary fix to bring the land laws in conformity with commitments to the WTO. In the long term, the land law system would be further reviewed to create a more level playing field between local and foreign investors.



No. 794/January 1-7, 2007