On June 22nd, the Ho Chi Minh City Institute of Resource and Environmental Economics sent a document to the Secretary of the Ho Chi Minh City Party Committee and the Chairman of the Ho Chi Minh City People's Committee proposing to adjust the land price adjustment coefficient (K coefficient) to level 1 for cases of land use conversion, land allocation, land leasing, and compensation calculation when the State reclaims land. This proposal does not apply to cases of house and land transfer.
According to the Ho Chi Minh City Institute of Resource and Environmental Economics, after reviewing the draft K coefficient table submitted by the Department of Agriculture and Environment to the Ho Chi Minh City People's Committee, it was found that in reality, the K coefficients are higher than the current land prices, with some areas showing an increase of 259% compared to prices at the beginning of 2026.
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It is proposed to apply a coefficient K of 1 to cases of land use conversion, land allocation, land leasing, and compensation calculation when the state reclaims land. |
The increase in this K coefficient and the initial land price list for construction in 2026, also based on advisory recommendations, are considered unusual because the construction process was surveyed according to market prices. However, a nearly 300% increase after only six months is very difficult for Ho Chi Minh City's economic development because land costs account for an uncontrollable proportion of production and service costs.
In the current socio-economic climate, businesses and individuals are facing significant financial pressures, rising input costs, and a sharp decline in market purchasing power. This is evidenced by the fact that more than 129,000 businesses withdrew from the market in the first six months of 2026.
Therefore, maintaining higher-than-actual K coefficient levels is creating a significant financial burden, depleting investment resources, and hindering the recovery of real estate projects and business production across the market.
To motivate investors and support businesses in overcoming difficult times, the Ho Chi Minh City Institute of Resource and Environmental Economics proposes that the city's leaders consider adjusting the K coefficient to 1.
Specifically, the proposal suggests applying a coefficient K of 1 to cases of land use conversion, land allocation, land leasing, and compensation calculation when the state reclaims land, excluding cases of land and house transfers.
Applying a K factor of 1 will bring land-related financial obligations closer to their actual market value, avoiding "equalization" or excessively high multipliers that push input costs to risky levels and could cause hyperinflation. A K factor greater than 1 should only be applied to high-density TOD (Transit-Oriented Development) areas or high-end commercial urban areas with international standards.
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A large K coefficient makes it impossible to achieve the goal of building rental housing because the rental price is higher than the average income of 8.6 million VND/month. |
Explaining this proposal, the leaders of the Ho Chi Minh City Institute of Resource and Environmental Economics argued that the current land price list in many areas has already been adjusted to a high level. If the principle of a coefficient K always greater than 1 is still applied, the cost of land use will be inflated excessively, shocking the public and depleting the cash flow of businesses. At the same time, the goal of building rental housing cannot be achieved because rental prices will exceed the average income of 8.6 million VND/month.
"A low K coefficient will help make land costs more reasonable, thereby making it easier for businesses to access production space, unlocking investment capital, and thus maintaining jobs and stabilizing social security," affirmed Mr. Pham Viet Thuan, Director of the Institute of Resource and Environmental Economics in Ho Chi Minh City.
At the same time, according to Mr. Thuan, this policy demonstrates the flexibility and partnership of local authorities with businesses, creating an attractive and healthy investment environment, thereby stimulating demand and economic recovery.
Mr. Pham Viet Thuan also suggested that, in the future, Ho Chi Minh City should direct the surveying and evaluation of actual transaction data in the market. Adjustments to the K coefficient should only be made upwards for areas and routes where actual transaction prices are significantly higher than the land price list.
Source: https://znews.vn/he-so-k-qua-cao-gay-soc-post1662297.html
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