Public land, a cake illegally shared by many firms in Vietnam

The management of public land in Vietnam has problems since the property has been misused for many consecutive years even though the abuse was discovered and fined by local authorities.

>> An audio version of the story is available here

The trick is simple but has been in place for a long time.

That is, big companies ask to be granted the rights to use state-owned land under lease contracts at ‘subsidized’ prices.

Then, those firms sublet the land at market rates that are much higher than the original prices.

Tuoi Tre (Youth) newspaper has found evidence to prove that the market rates may be six-fold the primary prices, meaning that a favored company just needs to lease out a land plot for two months to have a sufficient sum to pay for one year of renting the plot from the state.

In Vietnam, land is owned by the state and citizens are just given the rights to use it.

The land plot located at 2 Truong Chinh Street, Tan Phu District, Ho Chi Minh City is nearly 16 hectares in area and is leased by Thang Loi Textile and Garment Holding Company.

Thang Loi uses a part of the plot for offices and earmarks the remaining space for building factories and warehouses for rent.

The firm let out 5,200 square meters of the land lot to automobile assembling company Ngoi Sao Viet to build a bus exhibition center.

Thang Loi signed a lease agreement with Ngoi Sao Viet with a term of 25 years, from 2005 to 2030, at VND4.4 billion (US$195,600) a year.

The company also leased out a warehouse, located on another land plot of 5,200 square meters, to Vigawell Vietnam, a garment and textile joint venture, for $12,000 a month, or $144,000 per year, from 2002 to 2014.

The current lease price difference Thang Loi is pocketing is VND145,000 per square meter a year, or 5.8 times lower than the rate Thang Loi let the land out to Ngoi Sao Viet.

Although Thang Loi has been misusing the public land and benefiting much from it, the company even asked the state to lower the lease price.

Talking to Tuoi Tre via email, a Thang Loi representative asserted that the firm was justified in leasing out its warehouse and land.

“Thang Loi was allowed to change the purpose of land use to build an urban residential area,” the representative said.

“While waiting for the development of the project, Thang Loi just makes the most of it by letting it out.”

Phu Tho Hoa, an electronics and engineering shareholding company, sublet its leased land to clothing shop owners in Ho Chi Minh City. Photo: Tuoi Tre

In reality, Thang Loi inked a contract with the state in 2013 to rent the 16-hectare land plot for building offices, warehouses, and factories for garment and textile production.

The firm was once fined by officials in Tan Phu District for misusing the plot, but its rule breaking move has been unchanged ever since.

The Import-Export Shareholding Company No. 2 has been allowed to lease a 4,300 square meter land plot in Tay Thanh Ward by the People’s Committee of Ho Chi Minh City since 1994.

The property, now at 59 Che Lan Vien Street, was meant for a knitting factory.

Then, the company let out a 430 square meter warehouse for VND13 million ($578) a month, or VND156 million ($6,900) a year.

In addition, the company also let another plot of 3,100 square meters to Hung Vuong University for VND1.2 billion ($53,300) a year.

An official at the university said on condition of anonymity that the school signed a contract to lease the plot for 20 years, and now both sides are discussing the opportunity for the company to own shares of the school.

In 2009, the Ho Chi Minh City Department of Natural Resources and Environment asked the company to stop subletting it to other entities, as that goes against the land use purpose approved before.

Similarly, Phu Tho Hoa, an electronics and engineering shareholding company, was favored to rent a 4,023 square meter plot at 1026B Luy Ban Bich Street, Tan Phu District for VND60,000 a square meter a year, or VND241.38 million ($10,700) a year for the entire plot, from 2007 to 2020.

And the company let it out to around ten clothing shops.

The company was fined by the People’s Committee of Tan Phu in 2013 but the shops have remained operational there so far.

Nguyen Minh Quang, Minister of Natural Resources and Environment, said each hectare of state-owned farms and forests is now leased out for just a U.S. dollar a year. The government has let out over 7.9 million hectares of forests and has earned a total of VND1.8 trillion ($80 million) during the past ten years, or VND22,800 ($1) a year for each hectare.

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Public land, a cake illegally shared by many firms in Vietnam

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