The Ministry of Natural Resources and Environment (MONRE) has officially proposed a significant shift in Vietnam’s land valuation framework, suggesting the total removal of "specific land prices" in the upcoming amendments to the Land Law. Under this new proposal, land valuation would instead be determined through a streamlined system utilizing comprehensive land price lists and adjustment coefficients. This move aims to resolve long-standing bottlenecks in land management, compensation for resettlement, and the calculation of financial obligations to the state budget.
The draft amendment is currently being publicized by the Ministry for a wide-scale consultation process, which is scheduled to remain open for public and expert feedback until August 10. According to the Ministry’s report, although the Land Law 2024 has only been in effect for a relatively short period, several practical limitations have emerged. These hurdles necessitate further refinement of policies to unlock land resources, which are considered a vital engine for national socio-economic development.
Addressing the "Two-Price" System and Market Volatility
One of the primary motivations behind the proposal to abolish specific land prices is the desire to eliminate the "two-price" system—a phenomenon where a wide gap exists between the land prices determined by the state and the actual transaction prices on the open market. The Ministry argues that the coexistence of specific land prices alongside general land price lists has created confusion, administrative delays, and opportunities for corruption.
Under the current legal framework, specific land prices are applied in seven distinct scenarios. These include calculating land use fees for organizations when the state allocates land without an auction or tender; determining rental fees for one-time payments covering the entire lease term; and valuing land use rights during the equitization of state-owned enterprises. Furthermore, specific land prices are the primary benchmark for compensation when the state recovers land for national defense, security, or public interest projects.
However, the Ministry’s drafting committee noted that the current data infrastructure required for accurate specific price valuation remains insufficient. Most valuation methods currently rely on market data that is often distorted by speculation or "price-blowing" tactics. By moving toward a unified land price list supplemented by adjustment coefficients, the government hopes to create a more predictable and transparent environment that reflects the true value of land based on scientific data rather than fluctuating market sentiment.
The Mechanics of the Proposed Valuation System
The proposed transition involves a more robust application of the "Land Price List" (Bang gia dat) and the "Adjustment Coefficient" (He so dieu chinh). To understand the impact of this change, it is essential to distinguish between the two mechanisms:
- Land Price Lists: These are established by Provincial People’s Councils and are categorized by land type, region, and specific location. Under the current roadmap, new land price lists are expected to be applied from January 1, 2026. These lists will be updated more frequently than in the past to ensure they remain closely aligned with reality.
- Adjustment Coefficients: Often referred to as the "K-coefficient," this is a ratio used to increase or decrease the base price in the land price list to match the actual market value at a specific point in time. This allows for flexibility in a rapidly changing economic environment without requiring a complete overhaul of the base price list every few months.
The Ministry emphasizes that these state-determined prices will be built upon a foundation of "clean" data. This involves integrating the land database with other national data systems, including tax records, notary archives, and banking transaction histories. By cross-referencing these sources, the state can establish a "reasonable market value" that is resistant to manipulation by speculators.
Chronology of Land Valuation Reform in Vietnam
The journey toward a market-oriented land valuation system has been a cornerstone of Vietnam’s legal reforms over the last decade.
- The Land Law 2013: This version introduced the concept of the "land price frame" (khung gia dat), which set minimum and maximum price limits for various regions. However, this frame often lagged years behind actual market trends, leading to widespread grievances during land recovery.
- Resolution 18-NQ/TW (2022): This landmark resolution by the Central Committee of the Communist Party called for the abolition of the land price frame and mandated that land valuation must follow market principles.
- The Land Law 2024: This law officially removed the land price frame and shifted toward annual land price lists. It maintained the "specific land price" mechanism for complex cases.
- The Current Proposal (2024-2025): Recognizing that the "specific land price" mechanism still creates administrative friction, the Ministry is now proposing its complete removal to simplify the process further.
Supporting Data and Economic Implications
The impact of land valuation on the national economy cannot be overstated. According to data from the Ministry of Finance, revenues from land—including land use fees, rentals, and taxes—contribute significantly to the provincial and national budgets, often accounting for 12% to 15% of total state revenue in major urban centers like Hanoi and Ho Chi Minh City.
However, the "specific land price" process is notoriously slow. In many infrastructure projects, the valuation process can take six to twelve months, involving multiple rounds of consultation between consulting firms, appraisal councils, and provincial leaders. This delay often leads to cost overruns in construction and hinders the progress of vital public works.
For instance, in several key highway projects in Southern Vietnam, land acquisition delays due to pricing disputes have been cited as the primary reason for multi-year setbacks. By switching to a pre-determined price list and a clear adjustment coefficient, the government aims to shorten the compensation timeline, ensuring that residents receive fair value and projects can proceed on schedule.
Impact on Business and Enterprise Equitization
The proposal also carries heavy implications for the corporate sector, particularly for state-owned enterprises (SOEs) undergoing equitization. Historically, the valuation of land use rights during equitization has been a "hotspot" for potential loss of state assets. Specific land prices were often accused of being set too low, allowing valuable "golden land" plots to be transferred to private hands at a fraction of their market worth.
Conversely, some enterprises have argued that specific land prices set by local authorities were prohibitively high, stalling the equitization process and making the firms unattractive to strategic investors. A unified, data-driven land price list would provide the transparency needed to protect state assets while giving investors a clear financial roadmap.
Public and Expert Reactions
The proposal has sparked a diverse range of reactions from economists, real estate developers, and legal experts.
Many economists welcome the move as a step toward "digitalizing" the land market. "The core issue has never been the method of valuation, but the quality of the data," says one senior researcher at the Central Institute for Economic Management (CIEM). "If the Ministry can successfully link notary and banking data to the land price list, we will finally have a transparent market where ‘price-blowing’ is no longer profitable."
On the other hand, real estate developers have expressed concerns about the potential for land prices to skyrocket if the new lists are set too high. There are fears that if the land price list is pushed too close to the "peak" market price, the cost of project development will rise, eventually being passed on to homebuyers and further fueling housing unaffordability.
Future Outlook: Toward a Unified National Land Database
The ultimate success of removing specific land prices depends heavily on the completion of the National Land Information System. The Ministry of Natural Resources and Environment has set an ambitious goal to have a fully operational, multi-purpose land database by 2025.
Once this system is live, every land transaction will be recorded in real-time, providing a scientific basis for the adjustment coefficients. This would allow the state to move away from subjective appraisals and toward an automated, transparent valuation model.
As the consultation period draws to a close on August 10, the Ministry will synthesize the feedback to finalize the draft before submitting it to the Government and the National Assembly. If approved, this reform could mark the end of the "two-price" era in Vietnam, ushering in a new period of transparency and efficiency in one of the country’s most complex and valuable sectors.
The transition to a system based solely on land price lists and adjustment coefficients is more than just a technical change; it represents a fundamental shift in how the state manages national resources. By prioritizing data-driven science over ad-hoc appraisals, Vietnam aims to create a more equitable environment for both the state and its citizens, ensuring that land truly serves as a foundation for sustainable prosperity.
