Dec. 9 (Bloomberg) -- Hoang Anh Tuan learned over a loudspeaker that local Communist Party officials were seizing his farm in a village just outside Hanoi. A property developer wanted to build apartments on the land.
Tuan and about 360 families in the village of Duong Noi still oppose the evictions that began in 2008, leading to clashes with police earlier this year that saw Tuan and others block bulldozers seeking to flatten their land. Now, the farmers say they hope Vietnam’s newly-revised laws will give them some rights in a country where all land belongs to the state under the constitution.
“The law had so many loopholes that allowed bad people to take advantage,” Tuan, 26, said while waiting for odd jobs at a tea stall in the village. “It needed to be repaired.”
Lawmakers late last month passed legislation aimed at limiting the protracted land disputes that risk undermining the party by turning aggrieved farmers into folk heroes and which the World Bank has warned could deter foreign investment. Land-related tensions have overshadowed government efforts to boost infrastructure development and lift growth from its lowest rate in 13 years last year.
“Failure to resolve land disputes could mean that inequality worsens as some lose access to land without proper compensation and this could, in turn, lead to social unrest,” said Victoria Kwakwa, the World Bank’s country director. “It could also mean missed opportunities for investments that could create jobs and promote Vietnam’s rapid growth. Neither outcome is ideal.”
The new law, which takes effect from July 1, 2014, prohibits the government from reclaiming land for “economic development” as currently allowed. Large parcels will only be appropriated for socio-economic projects that “benefit the public and the nation,” with such action subject to approval by the prime minister and National Assembly. The government issues land use rights and users can still sell and transfer their rights to companies and individuals.
“The new law will tighten the process of taking land from users and increase transparency,” said the National Assembly’s deputy chief administrator Nguyen Si Dung. “This will help avoid the inappropriate seizure of land and hopefully will reduce complaints.”
Violent clashes capture headlines and groups of farmers regularly gather in parks and at government buildings in Hanoi to seek redress as Vietnam’s government struggles to accelerate growth. The government forecasts the economy to grow 5.4 percent this year, up from 5.25 percent last year, the slowest pace since 1999.
In September, a farmer in the northern province of Thai Binh shot five state officials, killing one and himself after his land was seized for a development project, the official Vietnam News reported.
In a United Nations Development Programme report in October, almost half the more than 5,000 people surveyed across the country said land disputes were the most common complaint and viewed them as a “disturbing” issue in their localities.
There were 700,000 land-related complaints in the three years to the end of 2011, according to a report in newspaper Thanh Nien last year, which cited National Assembly data. As home prices have almost doubled since 2004, according to CBRE Group Inc., many disputes are over the level of compensation.
One million hectares (2.5 million acres) of farm land was converted to non-agricultural purposes in 2001 to 2010, according to the World Bank.
The politburo, the highest decision-making body of the party, passed a resolution on land policies in November last year in which it acknowledged that “corruption and wrongdoings in this field are rampant,” “underground transactions are widespread” and “a number of cadres have abused their power to get illegal profits and harass for bribes.”
The new law sets up a compensation process that seeks to bring prices closer to market rates, with local authorities setting and adjusting a price range when it changes 20 percent on either side of prevailing prices.
The Asian Development Bank has offered to work with the government on the implementation of the law to create a more independent assessment of prices and help keep them in line with the market, said Jesper Petersen, the bank’s portfolio management head in Vietnam.
Land acquisition and resettlement is the “number one” delay for projects, said Petersen. Many of the 80 ADB-financed projects in Vietnam, worth a total of about $9 billion, are about two years behind schedule due to land issues, he said.
“Infrastructure constraints are one of the biggest obstacles to Vietnam’s growth,” he said. “More infrastructure investment is needed. Once the infrastructure comes in, the foreign investors will come in.”
Two years after construction of the 8.8 trillion dong ($416 million) Cat Linh-Ha Dong elevated urban railway in Hanoi began, only 9 of 14 kilometers had been completed due to land clearance difficulties, Vietnam News reported in May.
Such delays can cause investors in commercial development projects to not realize anticipated returns, said Peter Ryder, the Hanoi-based CEO of Indochina Capital, whose real estate arm has built shopping malls and hotel resorts. The company has put several projects on hold which “don’t look like they’re going to make money” because of land clearance snags, he said.
“It’s a risk,” Ryder said. “Delays cost you a lot of money and can sink a project.”
Questions remain as to whether the implementation of the law will actually benefit farmers, and some officials say the changes are open to interpretation.
National Assembly delegate Cao Si Kiem and other lawmakers said the new law can be viewed as broadening the state’s powers to reclaim land. He said the implementing regulations will provide the details and will be further debated. “This is an expansion of projects to be considered for land reclamation as long as the projects prove to benefit the public and the nation,” Kiem said.
In Duong Noi village, farmer Tuan and others have refused to accept the compensation on offer: about $13 per square meter. Authorities have seized Tuan’s farm, filled it with sand and left it idle. Tuan and others say they’ll only be satisfied if they are given another plot.
La Quang Thuc, head of the People’s Committee in Duong Noi, declined to comment. Nguyen Hoang Anh, deputy CEO of Nam Cuong Co., which has built apartments on some of the seized land, declined to comment. It’s unclear if the new law will apply to cases already pending.
Since bulldozers razed a cemetery, the families take turns guarding the remaining fields from a makeshift shack off the main road into the village.
“This is not what Uncle Ho would have done -- take away farmers’ land and give it to investors,” said Dang Thi Liet, 70, referring to the nation’s founder Ho Chi Minh. Liet, like others in the village, received her parcel during the socialist land distribution more than 60 years ago.
“I have raised my family off this land. It’s the only thing I have.”
To contact Bloomberg News staff for this story: K. Oanh Ha in Hanoi at firstname.lastname@example.org
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