Ministry considers reduction in land-use fees for struggling firms

Laws - To help businesses cope with the adverse economic situation, the Ministry of Finance is planning to reduce land rents for production firms who suffered steep rental hikes following recent changes in a decree.

If the proposal is approved by the Government, the businesses, who are now paying 10-30 times more than they did before the hikes, would get 30-50 per cent rental cuts this year and next, Vietnam Economic Times newspaper reported.

Trading and service firms would not be considered, the report said.

The ministry explained that the cut was to help them at a time when the economic situation was difficult and bank interest rates were very high.

With more businesses likely to see their rents hiked this year and next, they will also benefit from the subsidy.

The Vietnam Economic Times quoted Pham Manh Cuong, head of ministry's Department of Public Property Management, as saying more than 300,000 businesses operated on public land but paid a mere VND3 trillion (US$145 million) in rent, or 8 per cent of total Government revenue.

"That is why many of the businesses use the land for wrong purposes. Worse still, many businesses sub-lease the land to others to earn a profit."

Many businesses have complained about the steep increase effected this year.

But Cuong pointed out they had been paying the same low rents for 20 years and that the rents should have been increased every five years.

The ministry's plan also includes rent ceilings for localities to apply but it has yet to disclose them.

Foreign businesses do not have to pay rent advances.

But under decrees 121 and 120, another on the same subject – foreign-invested and domestic businesses are supposed to receive equal treatment.