State pledges to address investor land concerns

June 21, 2004 | 18:34
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The government plans to set a timetable to address foreign investor’s concerns about leasing land from individuals, negotiating mortgages at foreign credit agencies and balancing rights between foreign and local investors in land leasing, a senior government official has said.
Deputy Minister of Natural Resources and Environment Dang Hung Vo said although these issues had not been mentioned in the newly amended Land Law, which takes effect on July 1, the government was paying attention to their concerns and would work out measures to address them.
However, when these solutions would be carried out remained unclear as these were complicated issue requiring time to resolve, Vo said.
Initially any new mechanisms are expected to be applied only on a pilot basis.
Foreign investors have said the procedures in the newly amended Land Law are more transparent since they provide specific steps in land transaction.
However, they remained concerned about three problems that form the basis of long standing demands.
Investors have suggested they be allowed to lease land for non-state users.
They say the State at present does not have a big land reserve and foreign investors first have to pay current land users to vacate the property before they lease it from the state.
This means investors have to pay twice for land, making investment in Vietnam more expensive.
This problem would be removed if foreign investors could directly lease land from non-state users as they would not have to pay compensation.
Vo said the government was considering this proposal.
As an example he cited a case in which a joint venture turns into a 100 per cent foreign-owned company.
In these circumstances, the investor might be allowed to continue the lease with the existing land use rights owners.
In terms of new lease contracts, Vo also affirmed that the government would facilitate individuals and households to lease land to foreign investors.
This is because the mechanism would benefit these owners for the fact that they can lease at higher price.
“We agree that this is a good method,” said Vo.
He added that the government had asked the ministry to implement the proposal from local authorities on a trial basis before submitting it to the National Assembly Standing Committee for approval.
Foreign investors have also asked that land users in Vietnam be allowed to mortgage their land use rights at foreign-based credit agencies.
They claim this mortgage is vital to large-scale projects in order to secure loans that domestic credit agencies are not able to provide.
In response, Vo said the government had asked the State Bank and the Ministry of Natural Resources and Environment to work out a plan to address this issue.
Though such a plan has not been finalised, Vo reiterated that the mechanism would be tested on a trial basis.
The vice minister said this mortgage was likely to be first applied in open economic zones such as Chu Lai in Quang Nam province since this kind of zone, where land is owned by the Vietnamese state.
Vo also said that there was no difference in the rights and obligations of land users between the two mechanisms.
The state allocates local users land and collects land use fees and the state leases land to foreign users for a certain period and collects rental.
The minister said land users under both mechanisms had full rights and obligations in land use rights transfer, mortgage and sub-leasing.
The only difference was that foreigners were not allowed to receive land use right transfers, an issue that Vo described as a shortcoming in the real estate market.
Vo said the ministry would consider the problem while taking into account the development of the property market before it submits a proposal to the government and the National Assembly for approval.

By Kim Chi

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