Therefore, experts in the field proposed to upgrade those regulations immediately and to apply stricter sanctions to violators.

Thu Thiem land lots in the auction. (Photo: SGGP)

Dr. Nguyen Huu Nguyen trom Ho Chi Minh City Urban Planning Development Association stated that the incident of contract cancelation in Thu Thiem land use right auction should become a valuable lesson for law makers.

He analyzed that the primary purpose of any business is profit. Therefore, such abnormally high bids in the auction should be a warning sign for the authorities, since this irrational price could activate a chain reaction of land price increase in the neighbors of the auctioned lots, which in turn would bring those winners more profit. The culprit can be identified as long as we can find those partnering with these winners.

Nguyen The Phuong, member of the Executive Committee Vietnam Valuation Association, agreed with that viewpoint, saying that it is essential to pinpoint those behind the screen and a draw a lesson from this. It should also be said that the selection of participants in the Thu Thiem land use right auction was too lenient.

Tan Hoang Minh Group was the winner of the land use right for the lot at 23 Le Duan Street in District 1 of HCMC, but then it was tardy in project implementation and payment yet still received no strict sanction from the municipal authorities. When finding a suitable partner, it transferred the project to earn money from that.

Investors normally compare land use price between HCMC and other areas before making a decision. Hence, HCMC leaders had to spend money on re-evaluating the auctioned lots and related tasks. This contract cancelation is a waste of the state budget, along with negative impacts on land compensation in future projects.

Proposing feasible solutions for the mentioned inadequacies, Director of Hoang Gia Price Assessment JSC. Pham Thi Binh said that it is necessary to carefully consider the financial and project implementation capacities of auction participants. These organizations must be able to prove their financial capacity and present their project implementation history, which was a lack in the Thu Thiem land auction case.

President of HCMC Real Estate Association Le Hoang Chau pointed out four legal loopholes that have been taken advantage of in the incident.

Firstly, the maximum down payment is only 20 percent of the initial auctioned price, with no request on additional payment if the winning price is much higher than the former one.

Secondly, the assessment process for auction participants’ capacity is too loose as the Auction Law 2016 has no detailed provision on the conditions of ‘having financial capacity’ or ‘not violating the Land Law’ of auction participants.

Thirdly, the sanction for tardiness in putting the land into use is too weak to be a deterrent, leading to possible hoarding of investors.

Lastly, there are still inadequacies in identifying specific land use prices to be the foundation for the initial auction price.

Head of the Institute of Southern Construction Planning Nguyen Thanh Hai advised that HCMC be aware of investors taking advantage of legal loopholes and leading the market to earn profit. It is critical to upgrade the law to completely solve such problems.

Head of the HCMC Institute for Development Study Tran Hoang Ngan voiced that other important matters should also be reviewed, such as regulations on land use right auction procedure, the deadline for auction winners to pay money, the criteria of auction participants, the financial capacity of auction participants.

His organization will collect all logical proposals and send to the municipal authorities, focusing on the fact that land use right auction is a special auction kind asking for specific tight regulations (assessing the financial capacity of participants, identifying the initial auction price and down payment, preparing suitable sanctions).

The HCMC Taxation Department yesterday reported that no winner of Thu Thiem land use right auction has paid money as regulated yet. Therefore, after 90 days of payment notice release (from January 6, 2022), this department will enforce debt collection, along with a late payment interest of 0.03 percent a day.

Among the four winners, Viet Star Real Estate Investment Co. Ltd. (under Tan Hoang Minh Group) – winner of land lot No. 3-12 – and Binh Minh Trading Business and Investment Co. Ltd. – winner of land lot No.3-9 – canceled the contract, agreeing to lose their down payment.

Source: Sai Gon Giai Phong

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