Looking closely, for the past few months, government agencies and the public have been discussing, giving opinions, and holding workshops on amending the Land Law. The main story is the obstacles to life caused by the shortcomings of the current land law. Looking further, from 2016 to 2020, the Prime Minister has requested to amend the Land Law four times.
The first amendment is to serve the development of large-scale, high-tech agricultural economy (2016). The second amendment is to create a legal framework to develop the tourism real estate segment (2018). The third amendment is to remove legal obstacles in approving residential real estate projects (2020). The fourth amendment is to prevent security risks when many foreign investors are holding land with national defense advantages (2020).
It was not until June 16, 2022, when the 13th Party Central Committee passed Resolution 18-NQ/TW at the 5th Conference on "continuing to innovate and perfect institutions and policies, improving the effectiveness and efficiency of land management and use, creating momentum to turn our country into a high-income developed country", that the amendment of the Land Law was considered an important political policy to strengthen the development steps to bring the country to a high-income level.
Looking back at the land law throughout the period since the country's renovation until now, it can be seen that the main idea is to put land resources as an input market of the economy. The 1987 Land Law has a purely subsidized economic form, which is not surprising because it was not until 1991 that the market economy was officially accepted at the 7th Party Congress.
After 4 years, the 1993 Land Law moved closer to the market mechanism by defining land with a price but regulated by the State and establishing a land use rights market for households and individuals. After 10 years, the 2003 Land Law fully approached the land use rights market for economic organizations, households and individuals; and the land price regulated by the State must be consistent with the market. The 2013 Land Law still retains these regulations but often uses administrative tools to remedy the shortcomings of the market mechanism.
Up to now, it can be seen that the legal regulations related to promoting the land use rights market are still in legal documents, not yet put into practice in the daily life. From this weakness, it has created a context where people's complaints about land always account for about 70% of the total number of civil complaints, and the number of managers falling into legal trouble is increasing day by day.
Current land law has two major disadvantages: one is that land prices regulated by the State gradually increase but are always much lower than the market price, and two is that the land conversion process is not associated with benefit sharing.
The first drawback is related to the reality of two land prices, while the law stipulates that state land prices must be consistent with the market. Over the past 20 years, this drawback has remained the same. The difference in the value of the two land prices is the main cause of both complaints from people whose land has been recovered and the interests of investors who are assigned and leased land associated with the authority of state officials. It can be seen that the difference in the two land prices is an index measuring the standard deviation of the land use rights market, measuring the level of complaints from people whose land has been recovered, and measuring the opportunity for corruption by competent officials.
So, the essential thing to do is to create a State Land Price List that is consistent with market value. Market value is synthesized from market prices on land use right transfer contracts. Due to unreasonable regulations on income tax from land use right transfer, people participating in the transfer still record on the contract the land price is only equal to the State price to reduce tax. When the Land Price List is raised closer to the market and the regulation on income tax from land use right transfer is only calculated according to the Price List, the transferor will record the actual land price on the contract. From there, we will gradually collect the database of market land prices and calculate the Land Price List that is consistent with the market. When the Land Price List increases, it will cause income tax from land use right transfer to increase, causing difficulties for people, and the State will reduce the tax rate to an appropriate level.
The second drawback in the process of converting land from current use to investment projects is related to benefit sharing. For a long time, the law has only focused on two conversion mechanisms, one is the compulsory mechanism based on the land recovery decision and the other is the voluntary mechanism based on market transactions between investors and current land users. The compulsory mechanism is always associated with complicated complaints from the people. The voluntary mechanism makes it difficult for investors to negotiate with 100% of current land users, making it almost impossible to succeed.
According to the Constitution, the State reclaims land in cases of real necessity for use for national defense and security purposes; economic and social development for national and public interests. Looking at this provision, it can be seen that in cases where investment projects are not profitable, the State must apply the mechanism of compulsory land reclamation. What needs to be improved is to re-arrange the compensation, support and resettlement plan to be satisfactory. Sensitive issues still occur in profitable investment projects, with the investor's own interests linked to national and public interests determined in accordance with each stage of development.
In terms of benefits, profitable investment projects must use a land transfer mechanism that has both mandatory and voluntary elements. The mandatory element is land transfer, but the voluntary element is social consensus, that is, consensus with the majority of community opinions of those who are using the land with a transfer plan associated with the interests of all parties. Foreigners call this a social consensus land transfer mechanism.
The above Resolution 18-NQ/TW has raised a series of issues on resolving all legal bottlenecks that are currently being encountered, as well as issues guiding the country's development. The Resolution has set the key task of "promoting the commercialization of land use rights".
According to the experience of industrialized countries near our country, to escape the middle-income trap and move towards high income, we need to focus on building high-quality human resources associated with high technology. To do this, we need large capital, which can be obtained from exploiting the potential capital in the land through the process of land capitalization. We imagine that land has a very high value since the investment project on the land, the remaining problem is how to collect that capital and how to share it.
Vietnam can develop strongly when it knows how to rely on market mechanisms, combine with people's strength to increase the value of human resources along with technology and stand on its own feet when it can control the process of land capitalization.
Illustration: Quang Dung - Thanh Cuong
