Businesses are suffering in the whirlwind of bureaucratic procedures.

Businesses are suffering in the whirlwind of bureaucratic procedures - Part 5: Don't let businesses and investors "fall ill"

Amidst pressing issues facing numerous projects, such as delays in land valuation, planning adjustments, and waiting for authorities to rectify past mistakes, which erode the health and confidence of businesses and investors, several lawyers and experts have shared their perspectives and proposed solutions.

Numerous projects in Central Vietnam have stalled due to various reasons, most commonly due to obstacles related to planning adjustments, land use structure and form, and land valuation. The time required to complete these procedures is complex and lengthy, not only draining businesses financially but also eroding trust in the local authorities.

Investors have the right to file a complaint or lawsuit to claim their rights.

- Lawyer Le Ngoc Doan, Da Nang City Bar Association

Adjusting the land lease term from 70 years to 50 years must comply with the provisions of Clause 3, Article 106 of the 2013 Land Law.

In cases where the land lease term is adjusted but does not comply with the provisions of Clause 3, Article 106 of the 2013 Land Law and causes damage to the land lessee, the responsibility lies with the competent state agency for land management, which in this case is the Provincial People's Committee.

Regarding land leases that do not comply with the provisions of Clause 3, Article 126 of the 2013 Land Law, and adjustments that do not comply with the provisions of Clause 3, Article 106 of the 2013 Land Law, the responsibility lies with the competent state agency.

Investors whose rights and interests have been violated and who have suffered losses may file a complaint or lawsuit with the competent people's court to claim their rights.

Investors need to provide specific evidence to prove the losses.

- Mr. Pham Ho Hoang Long, M.Sc., Director of An Thanh Consulting and Investment Company Limited

According to Article 126 of the 2013 Land Law, only projects with large investment capital but slow capital recovery, investment projects in areas with difficult socio -economic conditions, or areas with particularly difficult socio-economic conditions requiring a longer term, may have land allocation or lease terms exceeding 50 years, but not exceeding 70 years.

Therefore, for coastal tourism projects that were granted 70-year land leases by the government, which were later adjusted to 50 years, investors need to provide concrete evidence to prove losses due to the extended waiting period for adjustments, lost investment opportunities, etc., in order to have grounds to request compensation from the state management agency.

Regarding land prices, the Government has recently issued Decree No. 71/2024/ND-CP, effective from the date the Land Law No. 31/2024/QH15 comes into effect. However, this decree still has some issues that are not clearly regulated. For example, regarding the cost of technical infrastructure in surplus valuation, it is very difficult to appraise the estimate before valuation.

The government keeps making mistakes and then "correcting" them, but who takes responsibility when investors suffer losses?

- Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, Vice Chairman of the Vietnam Real Estate Association

In previous years, many coastal tourism projects, despite using land designated for commercial and service purposes, were granted land leases of up to 70 years by the authorities of some provinces and cities in Central Vietnam, which were later adjusted down to 50 years. This adjustment process was time-consuming, causing significant difficulties for businesses.

Of course, this issue has existed in the law before, but the efforts to prevent it have not been decisive enough. Furthermore, some legal regulations have loopholes, contradictions, and overlaps, leading to inconsistent interpretations and enforcement, with each locality adopting a different approach.

In some places, inspectors conduct reviews, uncover violations, followed by a process of explanation and handling, which creates stagnation in the development and implementation of local economic development plans and strategies.

According to our statistics, there are currently over 1,000 projects nationwide that have been halted for review, pending resolution, or awaiting new regulations to resolve the issues. Many of these projects show signs of lax state management.

Authorities that make mistakes must be held accountable, and may even face criminal prosecution. However, until now, no cases have been brought forward for "review" to clearly analyze how those mistakes by the authorities have harmed businesses and citizens.

For example, recently, some localities issued land use certificates for tourism and resort projects. Customers used these certificates as a basis for deciding to purchase products. When inspectors investigated and concluded that the issuance of the certificates was against regulations, the authorities "corrected" the situation by revoking or adjusting the issued certificates.

The authorities keep making mistakes and then "correcting" them, but who takes responsibility when investors and customers suffer losses? If this issue is not resolved, it will lead to people filing complaints and lawsuits against the developers at multiple levels, causing social instability, and especially eroding the trust of investors and the public in the legal system and government agencies.

In my opinion, regulations are needed. Besides punishing those who have committed violations, the government must always be ready to engage in dialogue and find solutions, even compensating for wrong decisions. And to prevent further violations, one of the most important things is to carefully consider and appoint officials, conducting thorough evaluations and screenings.

The newly issued land-related regulations are superior, more consistent, and more uniform. We believe that clear regulations will limit mistakes and create barriers that prevent officials from making errors.

Legal regulations need to be consistent.

- Lawyer Le Cao, FDVN Law Firm

Of the four methods for determining land value, the surplus method is implemented by subtracting the total estimated development costs of the land parcel or area from the total estimated development revenue, based on the most efficient land use according to the land use plan and detailed construction plan.

According to Article 158 of the 2024 Land Law and as guided by Article 6 of Decree No. 71/2024/ND-CP, the profit is essentially calculated by subtracting the estimated development costs from the estimated total development revenue.

However, in reality, costs are not just the costs of developing a real estate project, or the value of the real estate asset itself. Many are concerned that if profit is equated to total development revenue minus total development costs, then the original value of land use rights will not be included. Only the costs incurred from the initial investment and development phase will be considered, not the capital invested in purchasing the land or the land use fees payable. This would lead to a very large apparent profit. A large apparent profit would then lead to large taxes and fees, resulting in low actual profits, or even losses. Consequently, to ensure profitability, businesses would drive up real estate prices. This is detrimental to homebuyers and simultaneously pushes the market into a spiral of instability because prices do not reflect reality.

Those concerns, in my opinion, are very important. With the surplus method of calculation stipulated in Article 6 of the newly issued Decree No. 71/2024/ND-CP, even though there are detailed regulations to replace the provisions in Clause 8, Article 1 of Decree No. 12/2024/ND-CP (supplementing Article 5d of Decree No. 44/2014/ND-CP), it still cannot resolve the demand for bringing land prices closer to their actual value, because the profit value is artificially inflated, as I have just analyzed.

Despite fairly specific regulations on land valuation, the issue remains highly complicated in practice. Many valuation organizations are hesitant to appraise public assets and land related to projects using public funds, fearing accountability for any mistakes.

Therefore, land valuation is not just about determining price, but also about facilitating the legal flow for the real estate market. Once land use right certificates are issued, compensation for land clearance is paid, and land-related financial obligations are fulfilled, then subsequent legal issues can move forward.

Given the current shortcomings, I believe the following specific solutions are needed:

Firstly, in addition to Decree No. 71/2024/ND-CP, when drafting other decrees guiding the 2024 Land Law, the 2023 Real Estate Business Law, the 2023 Housing Law, etc., it is necessary to include specific and detailed regulations with a unified approach to control the true value in the real estate market. This includes synchronizing solutions to systematize accurate data and information on real estate in general and real estate values ​​in particular, including the value of land use rights. Accurate land valuation requires consistency in the regulations of relevant real estate laws.

Secondly, Article 8 of Decree No. 71/2024/ND-CP stipulates the factors affecting land prices, which is an important new content that requires the land valuation process to identify specific issues. This issue is discretionary in implementation; therefore, specific regulations and land valuation activities in localities must be consistent in considering standard conditions and data to use land valuation methods in practice in a scientific and accurate manner, reflecting the true market value of land use rights.

Thirdly, a comprehensive and systematic, consistent, and decisive implementation of new legal regulations on land, real estate, and housing is necessary to ensure their effective enforcement in practice. Land prices should be set and maintained appropriately, reflecting the true market value, and not be influenced by regulations related to investment, planning, business conditions, transaction conditions, and other provisions of various legal documents. When these regulations are effectively implemented, and the real estate market operates according to market principles, then real estate prices will reflect their true value.

INVESTOR THREATENS TO SUE DA NANG CITY PEOPLE'S COMMITTEE

On June 28, 2024, Hoa Binh Company Limited sent a notice to owners of apartments in the Da Nang Golden Bay Project (also known as the Hoa Binh Green Da Nang Complex Project) stating that on June 5, 2024, the company sent Official Letter No. 212-2024/CV-HB to the Chairman of the People's Committee of Da Nang City requesting a response regarding the issuance of ownership certificates for apartments in the Da Nang Golden Bay Project. If the People's Committee of Da Nang City does not provide a response by June 30, 2024, the company will file a lawsuit.
Reportedly, as of July 3, 2024, the Da Nang City People's Committee had not yet provided an official response, and Hoa Binh Company Limited stated that they would file a lawsuit as mentioned.

Source: https://baodautu.vn/doanh-nghiep-khoc-rong-trong-vong-xoay-thu-tuc---bai-5-dung-de-doanh-nghiep-nha-dau-tu-do-benh-d219299.html