Tighten land auctions, prevent market manipulation

Please “pay in installments” land auction

Regarding the land plots that won the auction in Ho Chi Minh City, up to now, in addition to the 2 businesses that have asked to leave the deposit, the other 2 businesses, Dream Repbulic and Sheen Mega, have written requests to gradually pay the auction money. Reasons given by businesses: After the land auction, many developments occurred that affected the plan; Impact of the COVID-19 pandemic…

Dream Repbulic and Sheen Mega ask to “pay in installments” for Thu Thiem land auction

However, these reasons are not in the case of delay in payment or delay in payment of financial obligations. According to the Ministry of Finance, the land auction has very clear, specific and transparent legal provisions. Therefore, in the provisions of the law, it is not allowed to pay the land fee in many times. In the land auction, investors must pay on time.

Currently, both of these businesses have not applied to stop implementing the project or put down a deposit, but whether the future of these projects is positive or not, there are still many concerns.

Screening land auction businesses

A very surprising similarity of the two businesses above are assets and business results. Dream Repbulic Joint Stock Company was established in 2017, with total assets of only nearly 9 million VND. In 2018 it was nearly 16 million VND, in 2019 it was 20 million VND and in 2020 it was nearly 16 million VND. The business has also not generated any revenue since its inception.

And Sheen Mega Joint Stock Company was established at the end of 2019. Total assets by the end of 2020 were only nearly 28 million dong, revenue was also at 0 dong.

Looking at the business results compared to the auction of a land plot of nearly VND 4,000 billion, public opinion cannot help but doubt the potential of the two companies to implement the project.

“With such capital and auction, it is also a high risk for Tax administration, we will also require professional units to strengthen supervision of their activities”, said Mr. Thai Minh Giao – Deputy Head of the Tax Department. Head of Ho Chi Minh City Tax Department said.

In fact, the auction of land use rights for 4 plots of land in Thu Thiem is revealing many potential risks when looking at the financial capacity of businesses. Currently, the Ministry of Natural Resources and Environment is collecting opinions on a draft amendment and supplement to a number of articles of Decree 43 detailing the implementation of a number of articles of the 2013 Land Law in order to limit unfair acts. , manipulate the real estate market in auction activities.

“The current law on land and investment has specific regulations on the capacity of organizations and individuals to participate in land auctions. The problem is the testing of the capacity of organizations and individuals. If you participate in the auction, will the auction organization carefully check this condition?” said Mr. Le Van Binh – Director of the Department of Economics and Land Fund Development, General Department of Land Management (Ministry of Natural Resources and Environment). ) said.

Need more feedback during the land auction process?

According to Mr. Tuan, when the Land Law is revised here, the Ministry will redefine the composition of the Land Price Appraisal Council to involve many agencies: Representative of the People’s Council; representative of landowners… In addition, there may be 2 or more enterprises appraising prices so that they can be compared.

Prevent land panic after auction

Currently, land use right auctions account for about 90% of public property auctions. In 2013, the country’s revenue from land was nearly 64,000 billion VND; 2016 is 128,000 billion VND; and in 2020 it will be nearly 255,000 billion VND. Thus, in 7 years, the revenue from land has increased more than 4 times.

Most of the revenue from land is the collection of land use fees, accounting for 80%, while the rental of water surface for aquaculture accounts for not much. Such an important source of income, but this source of income is not a sustainable source of income. Because many subjects, after winning the auction, assigned or leased land by the State, did not implement the projects.

As in the peak of the COVID-19 epidemic, in June 2021, more than 800 lots of land adjacent to Hong Tien residential area in Pho Yen town, Thai Nguyen province were auctioned off. The average return value is more than 2 times the starting price. There are people who have won more than 100 lots of land, but up to this point most of these land lots are still just vacant land.

According to regulations, the winning auction of land use rights must complete the payment after 30 days from the date of auction. However, the time limit for construction implementation has not been mentioned. This is the main reason why the land is abandoned after the auction.

The Vietnam Urban Development Planning Association said that the lack of strict and adequate regulations is an important cause of land speculation and creating a virtual market. Legal experts said, to prevent this situation, many countries apply high taxes or very strong sanctions if the owner leaves the land uncultivated, does not implement the project as committed.

In this regard, The director of the Department of Economic Affairs and Land Fund Development said that the delay in putting the land into use or using the land was not consistent with the project schedule as stipulated in the Land Law as well as the guiding documents on the implementation of the Land Law. belt in 2013.

Land allocated or leased by the State for the implementation of an investment project but not used for a period of 12 consecutive months or the land use schedule is 24 months behind the schedule stated in the investment project. If the land is not used for more than 24 months and must pay to the State an amount equivalent to the land use and lease fee during the delay period. and assets,” said Mr. Le Van Binh.

Mr. Binh said that the provisions of the law are clear, but in the process of implementation in the localities, they have not been drastic. Currently, the Ministry of Natural Resources and Environment is inspecting projects that are behind schedule in the locality.

Many businesses won the land price but were slow to implement the project

Winning a land auction at a very high price, in addition to creating a new price level, another consequence will occur, which is that many capital sources of the economy will be sucked into the field of land and real estate, such as land and real estate. “Working for a lifetime is not the same as taking profits on a plot of land”.

Moreover, land will still be just land if left unused, but will become the development foundation for many industries and localities if exploited effectively.

The Prime Minister requested to inspect the organization of land and real estate auctions in localities. In case there are abnormal manifestations, causing market instability, mistakes should be clarified and handled, so that profiteering will not occur. Reviewing legal regulations to advise on amendments and supplements, in order to prevent acts of profiteering.

Loopholes or loose regulations need to be corrected to ensure that the land use right auction method is strictly implemented, promoting more efficiency in land use and management.

To better understand the current regulations in land auction? What mechanism does the law need to better screen businesses participating in the auction as well as limit the current situation of depositing…? These questions will be answered in the program Today’s Issue on April 12.

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