Suggestions for solutions to limit negativity in land auctions

Many regulations...
Since the 1993 Land Law, Land Use Rights (LUR) have been officially considered assets of organizations and individuals, valued and traded on the market and have truly become a very important economic resource, especially in localities with large land funds.
In Nghe An, from very early on, provincial authorities at all levels have made great efforts in land exploitation, especially in the auction of residential land use rights. In particular, since the 2003 Land Law took effect, the auction of residential land use rights has been carried out in a fairly systematic and strict manner.

According to the Department of Justice, there are currently 19 professional auction organizations in the province, which by the end of 2016 had conducted 2,382 auctions, earning a difference of 250 billion VND compared to the initial starting price. In general, the asset auction organizations have conducted asset auctions in compliance with the law.

Scene of a land auction in Quynh Hong commune (Quynh Luu). Photo archive.

In Document No. 4883/UBND-NC dated November 2, 2018 of the People's Committee of Nghe An province on strengthening the management of land use rights auction activities in the province, it was also stated that "...in reality, land use rights auction activities still reveal some shortcomings such as: some localities are still confused in implementing regulations on selecting property auction organizations..., have not properly implemented regulations on public announcement of selection of property auction organizations, the supervisory role of the People's Committee at the district level is not serious, not following the prescribed order and procedures; some cases of posting notices of property auctions do not contain complete information, there is still a situation of revealing information about auction registrants before the auction takes place; in some places, there is also the phenomenon of "auction brokers", blue troops running rampant, colluding, lowering prices or raising prices, distorting auction results, causing insecurity and disorder in the locality, loss of budget revenue, affecting the rights of participants. auction house...”.

But the most notable are the new regulations such as: Article 56: “...property owners shall publicly announce on their electronic information page and specialized electronic information page on property auctions about the selection of an organization to auction assets..”;

Article 57: “... For real estate, the property auction organization must publicly announce at least twice in the print or visual newspapers of the Central Government or the province or centrally-run city where the property is auctioned and on the specialized electronic information page on property auctions...”.
In order to specify and implement the Law on Property Auction 2016, on March 2, 2018, the People's Committee of Nghe An province issued Decision No. 12/2018/QD-UBND promulgating regulations on auction of land use rights to allocate land with land use fees or lease land in Nghe An province, which stipulates many contents to minimize negativity in auctions such as: Regulations on price steps not lower than 5% of the starting price (Article 11); regulations on deposit for residential land auctions for individual households is 20% of the starting price, for land auctions to implement investment projects, the deposit is from 5% to 20% (Article 14);...

In particular, in Document No. 4883/UBND-NC dated November 2, 2018, to overcome the shortcomings and negative aspects in land use rights auctions, the People's Committee of Nghe An province requested the Department of Justice to disseminate and popularize the law on property auctions; strengthen inspection, examination and supervision of land use rights auction activities. Request the Department of Natural Resources and Environment to take the lead in coordinating with relevant agencies to guide and resolve difficulties and problems in land use rights auctions; assign the Provincial Police to direct the strengthening of situation monitoring, ensuring security and order at land use rights auctions; promptly detect and strictly handle violations of the law in land use rights auctions. People's Committees of districts, cities and towns must be responsible to the Provincial People's Committee for the results of land use rights auctions under their management authority...
...but still vulnerable
With the specific regulations mentioned above, the shortcomings and negative aspects in the land use rights auction in recent times have been somewhat limited. However, research shows that the new regulations on land use rights auction still have many loopholes that are easy to exploit.

Outside the auction area, there are often groups of people gathering with signs of collusion and price gouging. Photo courtesy

Posting information on the central or local mass media as analyzed, with the current large amount of press, auction organizations can easily "trick" auction participants. Posting at the headquarters of the People's Committee of the commune where the auctioned property is located is also very difficult for people in other areas to find out information.
Regarding the supervision of auction organization, according to regulations, the People's Committee at the competent level will establish an auction organization supervision team. However, this is a new issue, depending a lot on the level, capacity, responsibility and people. Organizing an auction right at the headquarters of the auction agency or the location designated by the auction organization is very difficult to supervise, lacking equipment to serve the supervision, making it difficult for competent people to check the responsibility of the supervision team and detect negative.

Scene of a land auction at the Nghe An Province Property Auction Service Center. Photo courtesy

Auction registration: according to current regulations, individuals and organizations participating in the auction submit documents and deposit to the property auction organization, the property auction organization sells auction documents, receives auction documents during office hours, continuously from the date of listing the property auction until 2 days before the auction opening date. Although there are regulations, it will be very difficult for the authorities to supervise the direct receipt of documents by the Property Auction Organization and in reality, negative things have happened, there needs to be a solution to this problem.

More solutions to limit negativity and increase budget revenue
To overcome the above limitations, minimize negative impacts, and increase budget revenue, we propose to supplement Decision No. 12/2018/QD-UBND dated March 2, 2018 of the People's Committee of Nghe An province on land use rights auction with the following provisions:
One is,Add a regulation requiring free public disclosure of auction information on the Nghe An Provincial Electronic Information Portal so that authorities can monitor online, eliminating information concealment.
Second,allowing people to register and submit documents to participate in the auction right at the "One-stop" headquarters of the District People's Committee. This unit is responsible for transferring documents and prepayments to the Auction Organization.
Third,Each district-level locality should arrange a common auction location, fully equipped with online surveillance cameras (if possible, broadcast live on the province's website) to easily detect negative events during the auction, identify "land brokers" to have appropriate handling measures.