Land is a national resource that can be used to fund
infrastructure projects, at a time when public investment for such projects is
declining.
Speaking at a conference about
using real estate funds to support infrastructure development held in Hanoi
yesterday, director of the Finance Ministry's Institute of Financial Strategy
and Policy Vu Nhu Thang said infrastructure investment accounted for 9.2 per
cent of GDP over the last five years, but funding for next year would be
lowered to 180 trillion c (US$8.5 billion) or 6.5 per cent of GDP.
According to Thang, land taxes
and fees have been a major source of income for the State and it was time for
Vietnam to think about other ways to better take advantage of real estate.
Pham Sy Liem, director of the
Institute for Urban Studies & Infrastructure Development, said Vietnam had
yet to impose house and land taxes, which is an important feature of taxation
in countries with high urban populations, and suggested having a different tax
rates for different sized houses.
Such a tax would help maintain
and build public infrastructure and public goods such as pavement, trees and
street lights, Liem said.
"It's the public
infrastructure that adds value to the surrounding land and property," he
said, using property values along the national highway as an example.
He also said instating a fee
for developing social infrastructure such as schools and hospitals would also
help infrastructure development.
Among the top three state
income earners last year, nearly 1.4 trillion dong ($66.6 million) was from
land tax, about 50 trillion dong ($2.4 million) from land-use fees and 3
trillion dong ($142.6 million) from land lease fees.
Head of the ministry's Bureau
of Public Property Management Pham Dinh Cuong said land-use fees, which
accounted for 90 per cent of land-related income, were often fixed for long
periods, so land lease fees were a more flexible option for the 500,000
enterprises renting land.
The Government could reclaim
leased land easier if the land was under planning for projects without paying
compensation or arranging resettlement.
He noted land clearance and
compensation payments were a bottleneck for most infrastructure projects
despite.
However, Cuong said that it
would be difficult to raise land lease fees with the current pressures of
inflation.
He also recommended mobilising
money from beneficiaries of infrastructure projects to help fix infrastructure
in need of repair, which could be handed to the Government.
Conference participants also
discussed the establishment of "clean" land banking that provides
data about areas available for the development of new projects where investors
did not have to worry about land clearance or compensation, which would
streamline the process.
Vietnam News
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