BizCLIR

One of the most significant constraints to enterprise establishment and growth in Vietnam is the difficulty that entrepreneurs face in obtaining and accessing land. Land disputes constitute approximately 75 percent of the recent complaints against government decisions. These obstacles arise from the complex and opaque regulatory framework for real property and the shortage of land in urban and industrialized areas. Other constraints include the low quality of property management services, including land and property valuation, development, and brokerage.

All land in Vietnam is owned by the people and administered by the state. The Land Law of 2003 is the first property law that clearly defines the role of the state in exercising authority over management of the land on behalf of the people. Currently, land users (who can be individuals or enterprises) can only own or lease the right to use the land. These land use rights can, however, be exchanged, transferred, mortgaged, leased and sub-leased, pledged, given as a gift or inherited, or contributed as legal capital. Also, land use rights can establish a basis for compensation if they are reclaimed by the state. The term “real estate” in Vietnam describes the ownership of land use rights and any buildings and other structures permanently attached to the land subject to the land use right.

It is generally expensive to rent land in industrial zones and to finance the cost of relocation to such zones. If entrepreneurs find an available rental property, they must often wait for a long time to get a Land Use Right Certificate (LURC), which serves as collateral to obtain loans from financial institutions. The administrative procedures governing LURCs are complex and time-consuming. An enterprise wishing to rent land and construct property on an industrial zone must obtain some 13 agreements and decisions by relevant authorities and invest significant resources. As a result, most industrial SMEs operate from their owners’ homes, resulting in inefficient production, urban pollution, and significant public disturbance.

It should be noted that, according to the Investment Law, real estate is one of the sectors in which investment is subject to conditions, regardless of the capital source. Accordingly, all real estate projects are subject to a review and approval procedure that ultimately results in an investment certificate.