Will the government decide to keep or abandon the surplus method?

Mr. Dao Trung Chinh

Thanh Nien had an interview with Mr. Dao Trung Chinh, Director of the Department of Planning and Land Resources Development, Ministry of Natural Resources and Environment (TN-MT) about this issue.

Could you tell us, on what basis does the draft amendment to Decree 44 remove the surplus method? If it is removed, what other methods of determining land prices can replace it more feasible?

Based on the summary of the implementation of the 2014 Land Law and Decree 44 of the Government on land valuation methods, we see that in the current period, the surplus method still shows many limitations, which can cause errors in the valuation process. In fact, many localities still have major problems in using this surplus method for valuation, especially after a number of cases occurred in the past, the land valuation work has been stalled. There are even projects that have been allocated land or leased land for the past 5-6 years, but have not been valued. Therefore, the Ministry of Natural Resources and Environment has proposed that the Government and the National Assembly temporarily not use the surplus method in determining land prices.

According to regulations, we have 5 methods of land valuation: comparison, deduction, surplus, income and land price adjustment coefficient. The Ministry of Natural Resources and Environment proposes to include the deduction method in the comparison method. After that, only the methods: comparison, income, land price adjustment coefficient will be used to determine land prices. Accordingly, in the comparison method, factors of potential development surplus will also be incorporated.

But experts and businesses all believe that the surplus method is superior to other methods. If it is removed, it will cause congestion in implementing legal procedures for projects, the state will lose tax revenue, many industries and workers will be unemployed...?

If you are worried like that, I also want to ask the opposite question: why is it that localities have been slow in determining land prices in recent times when the surplus method has not been abandoned? Many projects have allocated and leased land but still cannot calculate financial obligations, is the reason due to the surplus method?

The Government 's goal in amending Decree 44 is to have simple, transparent, easy-to-implement valuation methods that protect valuation officers and avoid unfortunate errors that may occur so that localities can be more proactive in determining land prices. Valuation officers will also feel more secure in their work. Thereby, the Government's goal of accelerating land valuation will also be achieved.

The Ministry of Natural Resources and Environment has reported that it should be abolished, and we have our own reasons. Currently, the Government is discussing and has not yet decided whether to abolish it or not. Whatever the method, the important thing is the input information. If the Government decides not to abolish the surplus method, it is also necessary to have stricter regulations on input information, parameters, and references. How to achieve two goals: one is to be clear and coherent so that cadres doing valuation work can work with peace of mind; two is to be stable, accurate, and more suitable to reality.

With the characteristics of many types of land in Vietnam, limiting the number of methods will make the valuation not enough to cover all different types of land and different conditions of application in practice. Not to mention, the surplus method currently accounts for 90% of land valuation, if abandoned to switch to another method, it will certainly cause congestion in the market, which has been frozen for the past year. Has the Ministry of Natural Resources and Environment considered this?

I think that the surplus method is a combination of other land valuation methods. The surplus method contains the comparison method. If you do not compare, you cannot get the revenue and costs. At the same time, it also contains the deduction method. If you do not compare and deduct, you cannot quantify or estimate the input costs. What we say is the assumed development direction, we must imagine what it will be like in the future 5 years from now and it must have a model of the present for us to compare.

Suppose the Government decides to abandon the surplus method, it still has to consider how to calculate it for a specific project or a specific type of land or many specific purposes. It needs to be calculated clearly, not just said to abandon it. The Ministry of Natural Resources and Environment has asked the advisory agency to try calculating using another land valuation method and found that it can still be calculated, so it proposed to stop the surplus method. If the Ministry of Natural Resources and Environment can calculate, why can't the local level calculate?

The Ministry has also compiled and honestly reported the situation of comments from experts, businesses, and people to the Government. The land valuation methods are all scientific . The Government will consider and decide which method to apply at the present time to ensure the goal of being easy to do, easy to apply, transparent, and creating peace of mind for officials and responsibility when implementing the biggest goal.

Suppose the surplus method in determining land prices is abandoned as proposed by the Ministry of Natural Resources and Environment, what benefits will people and businesses receive, sir?

On the business side, I think that with quick, simple procedures, decentralization, and delegation of authority associated with the responsibility of the person doing the valuation work, and the person doing the valuation work when assigned the job, they will also feel secure in doing it. That is the goal of amending Decree 44 in general, not just related to stopping the use of the surplus method. For the people, at the household level, the land price adjustment coefficient method is basically used. The procedures are so simple and transparent that they themselves can roughly calculate how much their family's financial obligations are.

Quickly resolve the time to perform land valuation operations for people and businesses to fulfill financial obligations to the State while ensuring transparency and clarity. Procedures, data, and data involved in land valuation are also more public.

63 provinces and cities need official opinions

Recently, the Ministry of Natural Resources and Environment has sent an official dispatch to 63 provinces and cities requesting an official opinion on whether or not to remove the surplus method in determining land prices and is waiting for a response. The goal of amending Decree 44 is that localities must determine land prices faster to remove obstacles for projects that are stuck at this stage as well as to implement new projects faster, ensuring the correct and sufficient collection of the State budget.

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