In a previous official letter, the Finance Ministry submitted a long list of businesses and projects to the Government, proposing Prime Minister Nguyen Xuan Phuc assign the Government Inspectorate to check them.

The ministry has also petitioned the Government to ask provincial and municipal governments to suspend work on downtown high-rise building projects whose land use rights have been transferred without going through auctions, and report them to the Government.

In case the Prime Minister allows for transfer of land use rights without auction for certain projects, local governments must determine land value based on market prices.

The ministry’s list includes 60 State-owned and joint-stock firms with State stakes that are allowed to convert their land use purposes. The list is compiled according to a report of the General Department of Taxation conducted from July 2014 to November 2016.

The land use right value in many instances has not yet been included in the value of many equitized enterprises. Some of these businesses have not held public auctions for land during their equitization process, according to the ministry.

The ministry said the evaluation of land prices used as a basis for collecting land use and rent fees is mainly dependent on consulting firms. However, their evaluations and their proposed prices are often below market levels.

According to the finance ministry’s proposal, from July 1, 2014 to November 30, 2016 there were 60 cases of State-owned enterprises (SOEs) receiving approval to convert land use purposes during their equitization process, including major projects such as Vincomreal’s Riva Park in Ho Chi Minh City and the Vinaconex - PVC Construction Investment JSC’s PVV-VinaPharm project in Hanoi, among others. 

In the meantime, the finance ministry has asked the Prime Minister to suspend the ongoing construction of buildings with inadequate land use purposes in main cities that were also not subject to an auction.

Last year, during the divestment of State capital from the Saigon Beer, Alcohol and Beverage Corp. (Sabeco) and the Hanoi Beer Alcohol and Beverage Corp. Habeco, the Prime Minister noted that “land use rights at these SOEs must be taken into account during the valuation process and there will be no discrimination between foreign and local partners.”

When asked his opinion on why land use rights are important in the valuation process, Member of the National Assembly’s Financial and Budget Commission, Mr. Bui Duc Thu, said the inclusion of land use rights during the process is so that investors cannot take over land in prime locations.

He believes that if land use rights are not taken into account, then land in cities and provinces that were previously leased at low prices to attract investment would be used for other purposes by the new investor. 

In such cases, the State would lose its benefits while land assets would fall under the ownership of certain individuals.

VN Economic Times/SGT