As per request from the Prime Minister, the Ministry of Construction is drafting the instruction on fighting against land speculation which aims to make the real estate market more transparent. Mr Ha from MOC which has been assigned to compile the draft instruction, talks about how to deal with the problems in the real estate market.

Which weak points of the real estate market will the instruction on fighting against the land speculation deal with?

I think that it is necessary to ‘feel the pulse’ of the ‘land fever’ to prescribe true remedies. The real estate market has been warmed up, but only in several big cities and in several advantageous positions. In these areas, the demand has exceeded the supply, I mean the short supply had led to the continued price increases.

I can see shortcomings in the land auctioning mechanism in localities, which relate to the compensation for site clearance. Real estate projects’ investors themselves are very slow in implementing projects, and as the result, the available apartments and houses cannot meet the demand. Ciputra in Hanoi and Phu My Hung in HCM City, for example, only put on sale 1-2 blocs of apartments a year, and their projects have been delayed for ten years.

One of the biggest problems of the real estate market is the uncontrollable speculation, which has created ‘virtual land fever’ on the market.

Experts believe that speculation can exist because Vietnam does not tax on land use. How will the instruction on fighting against land speculation deal with this problem?

It is true that we do not impose asset tax, while the land use tax rate is very low. I think the Ministry of Finance will have to consider the land use taxation, and impose the asset tax. In principle, progressive tax will be imposed on those who own many properties, or trade properties for making profit. Especially, it is also necessary to tax the investors who are slow in implementing their projects, the investors, who own many properties, but do not put into operation (leasing, transferring), leaving land and houses idle and creating ‘virtual land fever’.

In fact, it is not so simple to tax speculators, especially the process of granting house ownership right and land use right certificates has been going so slowly. What would you say about that?

The draft instruction on fighting against land speculation asks local authorities to speed up the work of granting house ownership right and land use right certificates. This will allow the imposition of taxes on true subjects. You are right that it is very difficult to do this, but I don’t think we would delay the taxation because of the difficulties.

What can be done to give more supplies to the market?

Taxation is just one of the measures. I think the most important thing we need to do now is to provide more products to the market. Local authorities will have to request investors to follow the project implementation process they have committed to. The investors who are slow in implementing projects will have the allocated land revoked, which will be allocated to other investors.

Source: Lao dong.