Vietnam - Where are people’s interests in land acquisition?

VietNamNet Bridge - The land acquisition process at present does not create opportunity for farmers to benefit from the value of assets created from the conversion of land use purposes.

Sustainable economic development in Vietnam depends on the change of land use purpose and other resources to more useful purposes.

Typically, economic growth is defined as economic growth (for example, the sustainable growth of real income per capita), and the structural transformation. The key factor for economic development is the growth of production inputs (land, labor, and capital), growth of the use of these inputs, and improvement of the quality of the organizational structure and management to sustain economic growth of inputs and improve their efficiency. Structural change is associated with the process of industrialization, urbanization and demographic restructuring. These changes are related to a systematic shift of the supply of inputs, demand for output and trade patterns.

These changes transform the way of land use. For example, the industrialization process needs to convert agricultural land into the activities for the purpose of industrialization, material processing, transportation and storage and waste treatment. Urbanization needs to convert farmland and other rural land (forest, grassland) into housing land and land for commercial, administrative, environmental, recreational purposes and infrastructure. The change of land use purpose is associated with labor shift from occupations with low labor productivity (in rural areas), to those with higher labor productivity (in urban areas), and this is the typical trend for rapid growth in Southeast Asia and especially in Vietnam in recent years.

Although this "development model" is often repeated when nations perform modernization, but they are associated with social and economic problems. Workers migrate, the land that used to generate income for farmers now is abandoned or used for projects, communities, the forests which used to create sustainable livelihoods for ethnic minority communities are now cut down or leveled to generate electricity and provide water and services for urban areas.

As infrastructure is improved, local traditional products are difficult to compete with imports, and rural towns and villages are grouped into administrative units and social structure of large scales. Farmers who lost their land have difficulties to get jobs due to their labor skills not adapting to new circumstances. Older workers with little education cannot leave their home towns and their living conditions gradually get worse.

As being mentioned above, the basic foundation of the State management on land is the Constitution, the Land Law and relevant legal documents. These legal documents determine how land is used, by whom and conditions, as well as the process to change the purpose of use.

In the current Land Law, farmers have some rights to use land. Unlike land in urban and rural areas, agricultural land is held by farmers within certain period of time--with 20 years for farmland and 50 years for perennial crop land. Farmers cannot convert land from agricultural purposes to other agricultural purposes (for example, from crops to livestock) without permission. They also are not allowed to convert agricultural land into non-agricultural purposes. This kind of land is always in a state of being withdrawn by the State at any time.

The Land Law 1988, Article 49 provided the allocation of land to the people in the case their land is recovered by the State. The Land Law 1993 amended this provision by allowing monetary compensation when the authorities do not have land to allocate to people. The recent amendments--namely Decree 69, Article 42, requires the compensation to be based on the land prices, and there are many methods to value the land.

The power to recover land has an absolute effect. The recovery is applied in the case of land not being used or being used improperly, or "land user intentionally harming the land." But generally, land acquisition will be applied when "the state needs to use the land for the purposes of national defense and national security, or for public purposes or economic development."

In principle, land acquisition must follow the specific process and is consistent with the planning and land use planning. From Article 22 to Article 30 of the Land Law 2003 describing how the system operates and by whom, and from Article 3 and Article 10 of Decree 69 provide more specific information.

While many legal documents require the implementation of planning and land use planning in Vietnam must be strictly controlled and be more efficient, there are still many difficulties involved. A large area of recovered land is unused, land for parks and industrial parks is not used optimally, land reserved for environmental purposes is often not used or not used effectively and despite the official restriction, rice land continues to be converted into land for non-agricultural purposes.

There are many reasons leading to inefficient use of land. Firstly, the structure of the planning of land use and land planning is complicated. Management bodies of all levels have to participate in the management of land.

The following evidence indicates one aspect of the problem: Minister of Natural Resources and Environment Pham Khoi Nguyen reported on June 13, 2009, to the National Assembly--that there were 145 golf course projects in Vietnam (later it was corrected to 166) which took 52,700 hectares of land, including 10,500 hectares of farmland. Both Nguyen and Minister of Planning and Investment Vo Hong Phuc confirmed that the golf course projects were not under the management of the Ministry of Planning and Investment because these projects were approved by provincial authorities. In response, the Prime Minister instructed to reduce the number of golf course projects to 89 and these projects were not allowed to use rice land with two crops/year.

Secondly, the land use planning system is fundamentally flawed. Each regulation in Decree 69 only refers to the "needs" and "requirements," but the basic principles of the conversion of land should be towards "economic and efficient use of land." Some mechanisms determine the price and reasonable allocation required to ensure that the “requirement" bringing higher value must be selected.

Thirdly, the Ministry of Natural Resources and Environment is responsible for how the system works. When there are too many agencies involved in this field (ministries, local governments, business groups and state security and defense agencies) and all of them need land, not a separate agency has enough manpower or influence to fulfill that responsibility. Decree 69 admits that the Ministry of Natural Resources and Environment cannot take full responsibility for issues related to conversion of paddy land and protective land by returning responsibility to the Prime Minister.

Fourthly, although setting out the principles for planning and land use planning, but in the process of implementation, the annual land use plans are changed frequently.

Although changes, in principles, must be consistent with the plans of the higher level (one year and five-year plans); but in fact, land is recovered anytime whenever the government (central and local) decide that they "need" land.

The way to recover land in Vietnam seems to be unfair for farmers. It does not allow people demanding worthy compensation even if they speak out against the behavior on them.

Moreover, acquisition of farmers' land is fundamentally different with the actual protection for non-agricultural land users. That raises the question of liability in the "unified implementation of state management of land in the whole country."

More importantly, the recovery of land has made multifaceted impacts on socio-economic development. Land acquisition was a systematic bias, focusing on the interests of the businesses and individuals involved in the clearance and infrastructure development. Meanwhile, farmers lose property and livelihood.

Compensation may offset the loss they suffered somewhat. But no compensation, including in provinces with the most generous compensation policies, can compensate for "converted land rent" that farmers deserve.

In essence, the land prices framework proposed by the provinces at the beginning of the year are lower than the market prices. The policies also provide assistance package for farmers whose land is recovered but this support is unable to compensate the price difference mentioned above.

The supports such as service land does not reach the hands of the people as being promised and some supports, for example, vocational training, is not prepared to help people to access new job.

The aforementioned land acquisition process does not offer opportunity for farmers to benefit from the value of the assets created from the change of the land use purpose. This land recovery system continues to exist because it facilitates local government to constraint resources. They allocate land to investors provided that investors pay for land acquisition fee and infrastructure development and the cost is deducted from the rent that they have to pay later.

The value of acquired land used in urban, commercial, industrial purposes is often hundreds of times higher than the amount of compensation. Revenues by selling acquired land make pressure on the local governments to promote land acquisition. Due to having no voice in the process of land acquisition, people are always the last subjects knowing what the government wants to do.

The Law gives farmers very limited rights to protect their interests before the land is acquired. This makes people upset and leads to disputes and appeals, creating large social costs for land conversion.

It should be noted that not all forms of land conversion bring about efficiency. Despite the legal requirements for planning and land use planning, because there is no coordination between local governments, large amounts of reclaimed land in over 50 provinces that are trying perform industrialization are not used or used at very low efficiency. There are provinces that do not have comparative advantage in industry and services, but they also try to withdraw land and make site clearance to wait for investors. The lessons for the provinces that are trying to "build up industrial parks and wait for investors" are the economic activities tending to be concentrated in a few centers only.

Recent reviews show that Vietnam has 228 industrial zones in 54 provinces. Of which, 145 are active, 83 are in the phase of site clearance, infrastructure development. The total area is 58,220 hectares, of which 38,075 hectares are eligible for hire. The average occupied land area in industrial parks is 46%. For operating industrial parks, the rate is 65%. There are several industrial parks that were established 25 years ago but at present less than 50% of the areas are used.

Ho Dang Hoa, Le Thi Quynh Tram, Pham Duy Nghia and Malcolm F. McPherson

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