Land rent is a burden
At the Ariyana Da Nang project of Thien Thai Hotel and Tourism Joint Stock Company (Vo Nguyen Giap Street, Ngu Hanh Son District), Mr. Le Minh Kha, Deputy General Director of the company, said that the area of the project that must pay annual land rent is about 22 hectares. The land rent is calculated according to the Vo Nguyen Giap road coefficient, the project currently has to pay more than 120 billion/year, while in the previous cycle, the company only paid 30 billion/year.
According to Mr. Kha, land rent is currently a burden for the project. While the main cash flow is generated from apartments, villas, and the conference center, it is not enough to pay the land rent. Specifically, in 2019, the revenue of the conference center was about 1.8 million USD (equivalent to 40 billion VND), and in 2023, about 1 million USD. Meanwhile, the cost of building the conference center is 450 billion VND. If we only calculate the area of the conference center with about 2 hectares, the land rent each year is about 10 billion VND.
Mr. Kha also said that when working with the Ministry of Natural Resources and Environment , the company learned that some projects in Hanoi divide the unit price according to land use function. The construction land is calculated separately from the land for landscape, trees, and traffic. The locality is completely allowed to decide the unit price.
In addition, Mr. Kha said that the current reality in the coastal strip of Da Nang has shortcomings. Specifically, the right side of Vo Nguyen Giap Street is mostly residential land, so applying a high price is reasonable. The left side is mainly projects with large land plots, low density of use, so it is recommended to issue separate unit prices.
Proposal to re-evaluate land prices
Meanwhile, at the Melia Da Nang Resort project (Ngu Hanh Son district), Mr. Nguyen Manh Trung, General Director of Sao Viet Non Nuoc Company Limited - the project investor, said that the current land rent is based on the 2019 land price list. While businesses are affected by the epidemic, the economy is in decline, so there is no revenue. Currently, Melia Da Nang Resort has to pay 28 billion VND per year. Meanwhile, the land used for construction has been paid once, the remaining areas for landscape, green trees, etc. must be rented at 70% of the commercial service land price. Mr. Trung said this is unreasonable.
“Da Nang City charges too high a price for land and businesses have been petitioning for many years but have not received any response. The city must re-evaluate land prices to save businesses and prevent this entire stretch of coastline from becoming deserted. Businesses have been milked dry,” Mr. Trung complained.
Receiving the opinions of enterprises, Mr. Ho Ky Minh suggested that the Department of Natural Resources and Environment consider and advise the City People's Committee. Mr. Minh also said that the City People's Committee has reported to the City Party Committee and the City People's Council. Any issues under the authority of the Central Government will soon have recommendations for adjustment.
Previously, a series of coastal businesses in Da Nang had sent a petition to the Da Nang City government stating that the land rent had increased too high, from 300-400% compared to the previous cycle, causing many businesses to face difficulties. These businesses mostly operate in the tourism sector in the coastal areas of Son Tra and Ngu Hanh Son districts.
Deputy Prime Minister Le Minh Khai has just signed Decision 25/2023/QD-TTg on reducing land rent for 2023. Accordingly, the Government decided to reduce 30% of land rent payable (revenue) for 2023 for land lessees; not to reduce the outstanding land rent of years before 2023 and late payment fees (if any).
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