Land Law: Opportunity for Effective Management of Socioeconomic Development Resources

The strategic national economic development master plan directs socioeconomic development and spatial (territorial) resource allocation. Socioeconomic development goals cannot be separated from Land Law where land use planning is central and vice versa. Land Law and land use planning cannot be separated from socioeconomic strategies.

Unlocking land resources for rapid and sustainable socioeconomic development

The strategic national economic development master plan directs socioeconomic development and spatial (territorial) resource allocation based on land use planning. Land use planning is a very important product of the State and an effective tool for building a plan to interlink resources for the sustainable development of the country. Resources, especially natural resources (like land), are well planned and implemented, which in turn will build investor confidence and social consensus, impact other resources such as production, people, society, and specially finance to create a positive development effect on the overall economy.

More than 30 years ago, Agenda 21, ratified by more than 170 countries at the Earth Summit in Rio de Janeiro, states that land use planning plays a very important role in natural resource management. In case there are conflicts of interest in land use, it allows resolving emerging conflicts and harmonizing interests to reach agreements that ensure social sustainability.

In fact, the development of human society, the formation and development of all material civilizations - spiritual civilizations, material technical achievements - scientific culture are all built on the underlying foundation of land use. Therefore, sustainable socioeconomic development goals cannot be separated from land use planning, and land use planning, in turn, cannot be separated from national and local socioeconomic development strategies and plans.

In Vietnam, land is a special type of property, owned by the entire people and representatively owned and singly managed by the State. The State grants land use rights to land users in accordance with the Land Law, so land use planning is one of the important contents of the Land Law and relates to land allocation for different uses in a holistic way that balances economic, social and environmental values. Land use planning lays a foundation for land allocation, land lease and land use purpose change and plays an important role in regulating the real estate market. Land use planning is established at the national, provincial and district levels, meeting requirements for implementing the strategy for rapid and sustainable socioeconomic development, as well as ensuring national defense, security and environmental protection and adaptation to climate change.

Main weaknesses of land use planning

In recent years, land management has made remarkable progress, in which land use planning is an important tool that supports the economical and efficient use of land and ensures sustainable development of resources.

However, in a changing world and with robustly developing technology, the improper construction of land use planning in the world as well as in Vietnam results in high costs (including opportunity cost and time cost), and wastes resources due to asynchronous connectivity, inefficient investment and weak technological adoption.

Theoretically, land use planning is largely shaped by old studies based on many basic concepts related to classical Western traditional land use planning regardless of the urban landscape, science and technology, or the rapidly changing multicultural life of people, especially in the East with high population density. In addition, weak land use policies have constrained supply and artificially inflated real estate values in major cities, giving rise to a high cost to the economy.

The quality of land use planning and some sectoral planning is not high and lacks a long-term strategic vision. Implementation, continuity and regional connectivity in land use planning are not smooth and land use forecasts in some areas do not match reality. The coordination as well as responsibility among levels and branches of authority in land use planning formulation and adjustment remains weak, leading to insufficient planning and suspended planning, destabilizes people's lives, and arouses group interests and speculation. All of these hinder manufacturing and business activities to develop products, even cause social conflicts (annually, administrative complaints with respect to land always account for about 70%), degrade product quality, and undermine public confidence in government and social capital.

Land use planning and other plannings (e.g. new rural commune construction planning and sectoral planning connected with land use) are still contradictory and inconsistent, so it is very difficult to implement. In particular, planning management and implementation is not serious or timely, and sanctions on violations of regulations on construction and planning adjustment are not clear enough and deterrent enough to prevent violations. According to current regulations, land use purpose changes are made in two forms: auction/bidding and self-negotiation between buyers and sellers to transfer land use rights. In the current land regulations, the conversion of land use purposes has not been handled well, causing great losses due to differences in land rent, especially in the equitization of State-owned enterprises (SOEs) and urbanization. This requires the strict management of land use purposes because an administrative decision can cause huge losses and waste of resources. Many mistakes also arise from here and cause corruption, destroy human morality and create disparities in income.

The relationship between the land-real estate field and the financial field is very close and organic. Moreover, with the land use planning, the land value will be raised and has a strong impact on the financial market. Even so, policies on the management of financial-land relationships are still limited. According to the State Bank of Vietnam (SBV), the real estate credit balance was about VND2,580 trillion (US$112 billion) as of the end of 2022, representing a year-on-year growth of 24.27%, becoming one of the highest-growth sectors and accounting for as big as 21.2% of total outstanding loans to the economy (the highest in five years).

Principles for effective land use planning

The 13th National Party Congress proposed institutional improvement as one of three strategic breakthrough stages, including revisions on the Land Law where land use planning is one of the key contents. In order to effectively carry out land use planning to create platforms for connecting and growing socioeconomic development resources, the following five main principles are proposed:

 Land use planning is not a standardized procedure that is applied uniformly around the world. Its content is based on nationally contextual analysis and land use planning is made on the top-down fundamental theory, updated with new knowledge about modern science, technology and social culture in line with actual national development. This means that interests of the country's growth must be put first to ensure a consistent and common vision. However, a prerequisite for realistic land use planning is a detailed analysis of different interest groups, aimed to find the different interests of stakeholders in order to form the basis for negotiation and decision-making processes because the core of land use planning is the common balance of land use planning purposes of all stakeholders and to avoid conflicts to achieve the highest consensus - most ideally, optimal connectivity and development of resources.

The Land Law, including land use planning, is the most effective tool for managing natural resources. Currently, the country's food security and geopolitical position in the East Sea are important components of the nation's most sustainable resources. Planning the Mekong Delta food center and the East Sea of Vietnam toward sustainable development must be placed at the heart of land use planning to ensure food security and national defense. The draft law is necessarily supplemented with urban land, urban construction land, sea reclaimed land and others, including the spatial planning and development of aboveground and underground zones, for synchronous development of technical infrastructure for the national economy.

Land use planning must lay the foundation for fairness and create social trust in assured residences. The core mission of land use planning includes initiating a transparent process of communication and cooperation that "allows all stakeholders to establish their interests and goals in the dialogue". The huge social capital created in the process of building and implementing this institution will foster socioeconomic development, build a solid foundation of morality and social law, bring happiness to people, and create a strong motivation for Vietnamese human resources for development and innovation.

 The government should use land use planning as leverage for growing social resources, especially promoting monetary and fiscal policies such as fair land tax. While a high asset tax may discourage investment, a high land tax provides an incentive for developing unused land. A land tax can also provide better access to land for investors as well as new, better developed infrastructure that increases the value of nearby land, thus automatically translating it into revenue and balancing budget revenue - spending. Land use planning, combined with a real estate price index, is essential because real estate prices are used as one indicator of financial stability and they play an important role in making policy decisions.

 Land use planning is a continuously progressive standard-setting process with flexible and open responses based on new findings and changing conditions. It is not only about preparing planning documents, but an iterative process from formulation, approval and execution to monitoring and inspection, that is both a principle and a method. New development visions and findings must be observed in detail and incorporated into the planning process in a timely manner. It may lead to reconsidering decisions and repeating steps taken. That process requires elasticity but also stability and consistency in planning.

2023 marks a more than decade since the International Day of Happiness was established by the United Nations. The United Nations announced that Vietnam climbed 12 spots in the World Happiness Report 2023. In the context that Vietnam's position has been constantly elevated in the international arena as stated by Party General Secretary Nguyen Phu Trong, the revised Land Law, with land use planning being orientated for growing socioeconomic resources, will be a good opportunity for us to make breakthrough steps on the path to become a modern industrialized country in the middle of the 21st century.

Dr. Doan Duy Khuong

Source: Vietnam Business Forum