In the first seven months of 2025, Vietnam’s state budget revenue reached an estimated 1.5775 quadrillion VND (about 62.34 billion USD), equivalent to 80.2% of the annual target. Much of this “budget pie” swelled thanks to surging land-related revenues across the country.

At the National Assembly’s socio-economic development oversight forum on August 6, veteran finance and budget expert Dr. Tran Du Lich likened the property market to “an airplane with only business and first-class seats, but no economy class.” He questioned whether an economy where middle- and low-income earners cannot dream of owning a home can be truly sustainable.

He warned that land prices are rising too quickly, far beyond the reach of most citizens. The current real estate bubble is not only fueled by speculation, but also by fiscal policy heavily reliant on land revenues.

Land revenues soar

In just the first half of 2025, land-related revenues reached 243.644 trillion VND (about 9.62 billion USD), equivalent to 96% of the year’s target and more than 2.6 times higher than the same period in 2024 – an unprecedented surge in recent years.

This boom has benefited both central and local budgets. Nghe An collected 10.27 trillion VND (405 million USD) from land, making up 66% of its total local revenue. Da Nang exceeded its target with 4 trillion VND (158 million USD) from land, contributing to total revenue of over 31.599 trillion VND (1.25 billion USD) in seven months, surpassing its annual goal.

Hanoi led the way with 86.751 trillion VND (3.43 billion USD) from housing and land in the first half, up 539% year-on-year, including about 74 trillion VND (2.92 billion USD) from land use fees – up over 600%. Ho Chi Minh City followed with more than 65 trillion VND (2.56 billion USD) from land, achieving 90.7% of its annual plan in just six months.

While these figures paint a bright fiscal picture, the underlying question remains: where is this massive “land rent” coming from, and who ultimately bears the cost?

Record-breaking revenues amid economic strain

Overall budget revenue for the first seven months rose 27.8% from the same period in 2024 – the highest growth in four years – with more than 80% of the annual target already achieved.

The increase is partly due to better tax administration, public investment disbursement, and recovering production and exports. However, data shows the primary driver is land, boosted by soaring prices and aggressive auctions.

Every square meter sold “at market price” – essentially at bubble-inflated levels – adds to state coffers but also burdens businesses and households with higher housing, production, and living costs.

Dr. Lich warned that converting agricultural land for auction has pushed prices to unsustainable levels. When incomes fail to keep up, instability becomes inevitable.

Revenue growth vs. economic health

Despite fiscal gains, 144,400 businesses exited the market in the first seven months of 2025 – an average of 20,600 closures per month, up 15.1% year-on-year. Tax and other payment arrears reached nearly 240 trillion VND (9.48 billion USD), reflecting serious difficulties in the production sector.

While land revenues fund health, education, and welfare, over-reliance on them is a short-term and risky path. High land prices drive up housing, services, and business costs, leading to reduced investment and competitiveness.

The greater risk is a real estate market gridlock: exhausted demand, price bubbles, supply-demand imbalance, and capital flight when prices peak.

The “plane without economy class” warning is a reminder that an economy excluding middle- and low-income homeownership is one that is unequal and unsustainable. When businesses are priced out of land access, budget revenue itself may no longer be secure.

A call for sustainable fiscal strategy

The core question: can revenue growth truly reflect the health of the economy and citizens?

Vietnam needs a budget strategy built on real production, investment, and consumption – not inflated land prices. Land policy should drive development, not just extract rent. The real estate market must serve the majority, enabling both homeownership for the public and affordable land access for enterprises, instead of locking everyone outside the “business-class cabin.”

Tu Giang