1. There are many risks of collusion in land price appraisal
The current Land Law stipulates five methods of land valuation, including:
– Compare;
– Subtracting;
– Income;
– Excess;
– Land price adjustment coefficient.
Land valuation is a complex and sensitive activity. The input database on land prices is currently incomplete and has not been updated in real time. Therefore, the valuation results are still not highly reliable. Taking advantage of that weakness, the situation of collusion in land price appraisal between the subjects participating in the valuation is becoming more and more complicated.
According to experts, it is necessary to clearly identify each subject in land valuation activities, land price appraisal, land price decision to take measures to prevent collusion and price settlement. Currently, there are 4 participants and the above activities include:
– State agencies;
– Real estate project investor;
– Enterprises appraise land prices;
– Independent reviewer.
These entities can actively link together to collude and settle land prices… This causes the valuation results to be skewed. Usually, because the number of land appraisal enterprises in each locality is not much, they all know each other and these enterprises also know the location of the officials of the Department of Natural Resources and Environment in the area. Therefore, it is easy to create intimate relationships with officials.
2. Mechanism to prevent collusion in land price appraisal
Currently, there is only an online bidding solution to select land price appraisal enterprises in order to prevent collusion in land price appraisal. But this method is also not really effective due to the reasons described in section 1.
In addition, the larger cause leading to the current land price settlement is the “fear of responsibility” of the actors in the activities of valuation, appraisal and decision on land prices. As mentioned in Section 1, there are currently five methods of land valuation. But the same project, applying different valuation methods, gives different results with a difference of up to 17%. The inability to synchronize the land valuation plan leads to the situation that the subjects have to… Link, collude, and arrange land valuation results to “match” together.
In order to prevent this risk, the National Assembly of Vietnam has proposed to “Formulate” the calculation of land use fees, land rents, etc. Accordingly, Ho Chi Minh City proposes to apply the “Coefficients” method. K” to calculate land use fees, land rents, etc., regardless of the value above or below 30 billion according to the land price list, instead of having to hire a consulting unit to appraise the land price as today.
For example:
Project A in the city. Thu Duc (10,000m2, adjacent to road B costs 20 million VND/m2 according to the land price list in HCMC). The coefficient K1 in Thu Duc city area is 3.3 times. Thus, the land price of road B is 20 million VND x 3.3 = 66 million VND/m2. If the “K coefficient” option is used for project A, the People’s Committee of Ho Chi Minh City can design the coefficient K4 depending on the type of real estate project and depending on the area. Assuming the coefficient K4 is 0.25 (25% of the land price of the price list) for project A, the amount the investor needs to pay is: 66 million VND x 0.25 x 10,000(m2) = 165 billion VND .
With the “K-factor” option, the amount of money the investor has to pay will ensure transparency. Both the State and enterprises can predict the amount of land use and land rent payable. The draft has been approved and will soon be piloted in HCMC.
(Refer to Investment Newspaper dated 09/6/2023)
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