A survey conducted by the Central Institute for Economic Management (CIEM) and Germany’s GTZ found that it takes a firm 230 days and seven distinct procedural applications before businesses can access a land use rights certificate.

Some businesses in the Tay Nguyen (Central Highlands) have nine application procedures to undergo.

The GTZ also reported that approximately 70 per cent of land use transactions traded among businesses were illegal.

As a result, owners of illegally transferred property are not allowed to mortgage their assets to borrow from banks, hindering their timely access to capital for investment and business.
While the 2003 Land Law made a number of improvements to land rights acquisition, there is still work to be done.

The time needed to register real estate was reduced from 78 days to 67 days, and the fee for real estate registration was cut to 1.2 per cent of the property’s value. Before 2003, the fee was as much as 5.5 per cent of property value.

However, Viet Nam’s real estate registration is still ranked at 39th of the 155 countries in terms of ease of use. In Thailand, real estate registration takes only two days.

Land lease prices soar

Businesses have also suffered from inflated lease prices for land. The 2003 Land Law stipulates that a business is to negotiate with the land owner for the land use rights.
Vu Duy Thai, general secretary of the Ha Noi Commerce Association, said the problem is compounded by the fact that there is usually more than one owner per plot of land.
In many cases, business and land owners come to a consensus but the project is suspended because basic infrastructure planning is not yet finished.

Thai said the price for non-farming land in rural areas is around VND900,000 per square metre, and that goes up to VND47.8 million per square metre in urban areas. These are much higher than market prices.

On the other hand, the price for farm land is too low, and as a result those who have their land reclaimed by local authorities often have trouble seeking adequate compensation.
The Kim Bai Ltd, company in Thanh Oai District of Ha Tay Province applied to lease 6,444 sq.m in 2002. Today, they are still waiting for land use rights and the company has not yet finished negotiations with local residents.

Tran Nhu Chung, an official at the Service Consultancy Company and Environment Technology Development, said his company has collected opinions and suggestions from businesses about the problem.

Administrative procedures tend to be the most problematic. Procedures on land allocation, land leases and land transfers were particularly difficult.

Businesses ranked land retrieval procedures as the second most difficult.

Pham Chi Lan, an official at the Government Research Board, said the problem mainly affects small and medium-sized enterprises who have difficulty accessing land.

In addition, she said there were many suspended planning projects hindering companies from doing business.

Source: Vietnam News