Global Courant 2023-05-19 11:34:54
Vietnam is undergoing a consultation process Country law and the related Housing Actamid declining consumer and investor confidence in Vietnam’s real estate market due to rising interest rates and the arrests of two well-known real estate magnates.
The land, housing and real estate laws in Vietnam are generally perceived as confusing and complex. A resolution of the Central Committee of the Communist Party, released on June 16, 2022, raised the public’s hopes when it stated that the new laws should harmonize the interests of the people, investors and the state.
Yet the government’s draft land and housing laws have been criticized by local actors and business associations for failing to address systemic land and housing problems.
Since land is controlled exclusively by the state, the power of the state to acquire land forcibly without paying fair compensation is an enduring concern. In Vietnam, the state may acquire land for a range of vaguely defined reasons, including “national economic development”, for the benefit of community or national interests, and for security purposes.
State officials, particularly at the local level, make all major decisions regarding land acquisition and allocation. Compensation for forcibly acquired land is based on state-set price lists, not the market value of the land. The discrepancy between land valuation and low compensation prices causes land to be displaced and investors dissatisfied.
The draft land law specifies specific instances where the state can acquire land to develop for the national and public interest, potentially making the law clearer. It also removed state pricing frameworks, which fixed land prices for five years, in favor of a more flexible annual price guide developed by the provincial-level People’s Committee that promises to be market-based.
While this was welcomed, many commentators are skeptical about whether the amendment can be implemented as it is little guidance how the market price of the land is determined. Since the People’s Committee retains control over determining land prices, the state is both player and referee in the land acquisition and development process.
Another issue that highlights the statistical approach to land in Vietnam is the inability of investors to use land rights as collateral to borrow money from foreign lenders. Under the 2013 land law, no foreign lender is allowed to mortgage a Vietnamese borrower’s land use rights.
Some groups are lobbying for a change in the law that would allow companies to mortgage their land-use rights in exchange for international funds for major economic projects. However, the government’s response has been cautious suggestions from experts to ensure that “no foreign organization can have legal authority over Vietnamese land.”
Vietnam is home to hot land disputes, with the people pitted against the communist government. Photo: AFP/Nhac Nguyen
Proposed changes to the Housing Act have also generated controversy. Vietnam’s property laws traditionally distinguish between land and houses. While the Socialist Manifesto calls for the abolition of private property, including land, Socialist governments allow home ownership, as property is not considered a factor of production.
The right to home ownership is protected indefinitely by the Vietnamese Constitution. But a proposal in the draft housing bill has raised concerns that it could limit apartment owners’ rights 50-70 years.
Given Vietnam’s large population and significant gap between rich and poor, apartments are popular and often the only way for young families and young people to enter the real estate market.
In 2022, the Department of Construction stated that it was considering placing a 50–70 year limit on apartment ownership, citing the United States’ 99-year lease term as precedent. But the proposed change sparked public fear because it provided an administrative process to strip apartment owners of their property rights.
As private land ownership predominates in the United States and state ownership of land predominates in Vietnam, Hanoi policymakers have policy implications of the proposed changes.
While the new draft removed reference to an apartment ownership limit, the change remains controversial because people could lose their tenure rights if their apartments are deemed unfit for habitation. There is also uncertainty about how the move to housing will proceed and whether fair compensation will be provided.
Commentators are now calling on policymakers to embrace new ways of thinking. Lawyer Nguyen Tien Lap, for example, has urged that land be seen as a “living space”, not just a commodity, and that the community be a real voice in land management.
He has also called for the removal of some grounds for mandatory land acquisition by the state, arguing that the current overlap of many existing lands increases the potential for legal misinterpretation and abuse.
If history is any guide, the new laws will build older principles. But one problem lies in the attempt by Vietnamese policymakers to import the idea of an apartment ownership limit without conveying its meaning. Such legal transplant rarely succeeds.
Foreign land investment is under fire in Vietnam. Photo: Huu Khoa/AFP
Statistical country regulation will not give way to market-driven regulation. Senior Vietnamese political leaders have made it clear in 2022 that state land ownership one sustainable principle. Similar debates originated in 2013 and resulted in little fundamental change of the laws.
While senior leaders cite social stability as an important consideration when assessing a change, they overlook the fact that the status quo already contributes to fear and instability in Vietnamese society.
It will be hard for government narratives to continue to assuage public concern amid the rising cost of living and the fear of it land and housing shortage.
Toan Le is an associate professor in the School of Law at Swinburne University of Technology.
This article was originally published by East Asia Forum and has been republished under a Creative Commons license.
Similar:
Loading…
