VietNamNet Bridge – Infrastructure developers and enterprises in IZs say that the government’s new land policy has caused them serious difficulties.

In early November, a South Korean-invested enterprise in Long Thanh IZ in Dong Nai province asked for a loan, but was turned down by commercial banks.

The banks, citing the 2013 Land Law which took effect on July 1, 2014, pointed out that the application for the loan was not lawful, because there was no document certifying that the Long Thanh IZ developer had paid all the land rent to the state as required.

Under the 2003 Land Law, enterprises in IZs that pay all the land rent to IZ developers can mortgage the land-use right certificates, or “red book” as called by Vietnamese, to borrow money from banks.

However, under the 2013 Land Law, enterprises will not be able to do that if the IZ developers have not paid all the land rent at once, instead of paying every year, to the State.

An enterprise in the Nhon Trach 2 IZ is also facing the problem. Until September 2014, the enterprise still could mortgage the land it leased in the IZ to borrow money from banks.

However, in early September, when the enterprise asked for a new loan, it was refused by the bank, which said that since the Nhon Trach 2 IZ developer did not pay all the land rents at once to the State, the enterprises in the IZ could not get bank loans.

An official of the Dong Nai IZ Management Board confirmed that many investors in the provincial IZs are having difficulties accessing loans due to the changed policy.

Ho Duc Thanh, chair of D2D, the developer of Nhon Trach 2 IZ, said there is no legal document showing the procedures for IZ developers to pay land rent at once to the State for this particular land.

Thanh went on to say that the new land policy has led to higher investment costs IZ developers have to pay, adding that much of infrastructure development could go bankrupt or incur huge losses.

Legally, Thanh said, secondary investors (enterprises), which have fulfilled all their duties, must enjoy the benefits the state promises to them.

“The payment of land rents at once or annually is a matter of the State and enterprises, not of secondary investors,” he explained.

Some lawyers, representing their clients, have also complained about the inconsistent policy, warning that the changing policies would discourage investors.

Cao Ngoc Duc, deputy general director of Tin Nghia Corporation, commented that the new land policy has caused problems for IZ developers, because it is nearly impossible for them to pay rent at once because of limited financial capability.

As for Nhon Trach 3 IZ developed by Tin Nghia, the hundreds of billions of dong it collected from Formosa, an enterprise, according to Duc, has been placed into investment.