HCM City seeks changes to land law

Laws - HCM City authorities have called for an overhaul of the 2003 Land Law to cope with outstanding problems associated with this legislation though it has played in a role in the city’s development process.

The law has significantly contributed to the city’s social and economic development since it came into force in July 2004, said Dao Anh Kiet, director of the city’s Department of Natural Resources and Environment.

Speaking at a recent conference, Kiet said HCMC had attracted the largest number of foreign invested projects, at around 3,800 as of late last year. Those projects have total investment capital of US$29 billion, and the property sector accounts for a majority.

Kiet said that in the past seven years, the property sector had contributed significantly to the city’s budget, at about 7% of the city’s annual budget.

However, some provisions in the current land law have become inappropriate in current conditions, causing problems for not only law enforcement agencies but also land owners and property developers.

Among the 11 outstanding problems, Kiet cited inconsistent regulations as the most pressing issue. The laws on land, investment, construction and housing, and even Government decrees have exposed clashing provisions.

These laws have come out under different circumstances, so clashes between them abound, he said.

The land law lacks a mechanism to ensure equal benefits for all stakeholders, namely the Government, land users and project owners.

The land use fee, according to the law, must be decided by market prices, which is described as unfair for investors. Project developers use their own money to clear land and thus increase its value but the law specifies the land use fee is based on the value of cleared land which is normally far higher than the original value.

With such a regulation in place, the land use fee is a variable which makes it difficult for investors to project their internal rate of return.

Kiet said HCMC now had 46 housing projects that had completed the required procedures for land but had not been able to pay the land use fee since relevant agencies had yet to decide on what market prices to apply.

The city suggested land should be governed by the land law only to avoid clashes with regulations issued by different ministries.