By Nguyen Thuy Linh & Huynh Tuong Long
FLECHEUX, NGO & ASSOCIES, VIETNAM
Land Law is an issue of paramount importance for any Vietnamese citizen, overseas Vietnamese, and foreign investors.
The 2003 Law on Land was adopted with specific provisions, which, in principle, did not require any further guideline or implementation texts.However, its implementation raised a lot of issues. Accordingly, on November 1, 2004, the Government issued two new Decrees: Decree No. 181/2004/ND-CP providing guidelines on implementation of the Law on Land and Decree No. 182/2004/ND-CP on sanctions against administrative violations in the field of land.
The article underlines only some of the aspects of Decree No. 181/2004/ND-CP – a “super-decree” with 14 chapters and 186 articles, according to the assessment of Mr. Mai Ai Truc – the Minister of Natural Resources and Environment.
The main objectives of this Decree are:
- to enact procedures to create a clear and transparent real estate market,
- to define new guarantees in favour of land users, and
- to prescribe sanctions in case of breach by officials of their duties in the management of land allocation and compensation for aggrieved land users.
As for the foreigners’ rights, the notion of foreign land user in the 2003 Law on Land has been broadened compared to the ones granted in the 1993 Law on Land. Entities subject to the land legislation consist, not only, of diplomatic foreign organizations, international organizations, inter-governmental organizations, foreign organizations and individuals, overseas Vietnamese (Viet kieu) investing in Vietnam, but also of Viet kieu engaged in cultural or scientific activities in Vietnam or living permanently in Vietnam and to whom the State of Vietnam allocates or leases land, or Viet kieu permitted to purchase residential houses attached to the right to use residential land.
It is the first time the Law on Land reserves one section – Section 4 of Chapter IV: Rights and obligations of land users – to set forth rights and obligations of overseas Vietnamese, foreign organizations and individuals using land.
These changes aim to create an equal “legal playing field” that presents the national unity policy as well as the open foreign policy of the Party and State of Vietnam.
Previously, in the 1993 Law on Land, Viet kieu were only entitled to use land in the form of leasing. Meanwhile, Vietnamese land users were entitled to use land in different forms. This provision was considered as unequalization on land use rights between Vietnamese land users and foreigners in general and overseas Vietnamese in particular.
The 2003 Law on Land has overcome this by allowing overseas Vietnamese to use land under one of the following forms:
- being leased land by the State of Vietnam with payment of annual rent;
- being leased land by the State of Vietnam with one-off payment of rent for the entire term of the lease;
- being assigned land use rights in an industrial park, hi-tech park or economic zone; or
- being sub-leased of land in an industrial park, hi-tech park or economic zone.
Besides, the new Land Law also provides more incentives for foreign investors, especially enterprises using land in industrial park (Article 90), hi-tech park (Article 91), economic zone (Article 92). In particular, these foreign investors shall be entitled:
- to assign the right to use the leased or sub-leased land and the assets owned by them attached to the land;
- to make capital contribution with the right to use the leased or sub-leased land in order to engage in business or production co-operation with a foreign organization or individual during the term of the land lease;
- to mortgage or guarantee using the right to use the leased or sub-leased land and the assets owned by them attached to the land with credit institutions licensed to operate in Vietnam.
In brief, foreign land users shall have rights to assign, to lease the right to use land, to mortgage or guarantee, and to make capital contribution using the right to use land during the term of land lease, etc. similarly to the rights of Vietnamese land users.
Decree No. 181 has moreover concretized these provisions by reserving more incentives for enterprises using non-agricultural land in foreign investment projects.
Notwithstanding the above advantages, there are still some obstacles that must be mentioned.
Pursuant to this Decree, the provincial/municipal Natural Resources and Environment Services shall be the only authority entitled to deal with applications for land allocating or leasing for investment projects of enterprises and shall be authorized to evaluate investment projects. The “one door” mechanism is a remarkable advance of the Decree, however, in practice it may be very difficult. Indeed, the provincial-level People’s Committees shall issue decisions on allocation of land to enterprises after having consulted the relevant departments or branches. Moreover, the Decree does not provide for the co-ordination between the provincial/municipal Natural Resources and Environment Services and the other relevant State bodies.
Decree No. 181 consists of 14 chapters, but it is structured with an unclear order and unclear criteria. Government can promulgate one or more decrees for implementation of the laws, however, the structures of these decrees should closely follow the structures of the adopted laws.
Some lawyers believe that in order to implement the Law on Land properly, the Ministry of Natural Resources and Environment should establish an executive committee of the Law on Land as same as the form of the executive committee of the Law on Enterprises which shall regularly acquire, research and issue timely solutions to obstacles during the course of implementation of the Law on Land.-