Property Rights in Vietnam

Property rights seem to be an area that is suffering in Vietnam, owing to its general lack of administrative efficiency.  Vietnam is an authoritarian single-party system, and it faces many problems known to plague most developing countries, including the need for capacity building among domestic institutions.

Property rights can be defined as “legal titles given to landowners enabling them freely to buy and sell their plots and other rights to use, gain income from, or sell property” (Todaro and Smith 2009, 835).

While Vietnam has taken definite steps towards the establishment of property rights since its doi moi reforms of 1986, issues like corruption and a general inability to efficiently enforce the laws set by the government hinder the movement toward privatizing property.

Prior to 1986 all property in Vietnam was state owned. However, as part of the general movement toward a more market-oriented system, the National Assembly passed the first Land Law in 1988 to provide for the state allocation of agricultural land from co-operatives to private households. This transformation from collective to individual property rights encouraged agricultural production, and households using land received land title certificates (LTCs). Under the 1986 law, foreign investors were allowed to lease land property for up to 50 years and in some poorer areas up to 70 years.  However, the adoption of this law did not include the creation of a specific land administration system (LAS). Instead, the allocation and registration of land was left to local authorities, and land users did not understand the significance of the LTCs they received. (GIM International 2008). In 1993, the National Assembly adopted a second Land Law that clearly outlined the economic importance of land. For example, the preamble of the 1993 Land Law states:

Land is an extremely valuable national resource, a special production material, the most important part of the environment, and the foundation on which residential areas are distributed, on which economic, cultural, social, security and national defence bases are constructed;

Over many generations, our people have devoted an enormous effort, labour and sacrificed our lives to establish and protect the land as it now is;

Under this law, households with LTCs were given five rights: land exchange, transfer, lease, inheritance, and mortgage. Also, the 1993 Land Law recognized the monetary value attached to land, and defined this. Finally, it established a land titling system, and the Land Administration System (LAS). Under the land law of 1993, households seeking LTCs had to apply to the district-level People's Committee. Before an application was approved the “land in question must be surveyed and the legal description of the household's land allocation that is entered on the application must be consistent with the commune's land registry” (Hare 2008, 345).  Although the official fee for getting one of these certificates for the household was VND 10,000, which is the equivalent of about USD 0.50, in reality the fees were much  larger  because local governments were not given enough financial support from the central government to accomplish the certification process (Hare 2008).

           

The LTC system was also very cumbersome in terms of administration. For example, the total process of approving and giving out LTCs for three villages in one district took 945 labor days. More important, given weaknesses in the judicial system, disputes over who has the right to land take a long time to work out between the parties involved. One village near Hanoi took more than 40 meetings to settle a single land dispute. In addition, the issuance of LTCs is unevenly distributed. For example, in the Mekong Delta, where the land is less separated and has larger plot sizes the process is much faster than in more urban provinces (Hare 2008, 346). Other problems related to the need for capacity building are also apparent.  As the Heritage Foundation’s 2011 Index of Economic Freedom notes, “Corrupt government bogs down the system of property rights, due to low wages for government officials and inadequate means of enforcing accountability on these officials. Therefore, “contracts are weakly enforced and resolution of disputes can take years” (Heritage 2011).

The 1993 Land Law has been updated and revised in recent years to help address these weaknesses. Most recently a third Land Law was adopted by the National Assembly in 2003 to support the development of a comprehensive, transparent and more uniform LAS. Ideally, this law will also increase the ability of local communities to resolve historically complicated land issues, create publicly available land use and management records, and facilitate the development of a property market. (GIM International 2008). The good news is that land prices are rising rapidly in line with the growth of the economy, and the state is now allocating nearly 10 percent of the revenue it generates from land to building up the LAS. Still, there is a need for capacity building for land officers at the local, provincial and national levels and for raising public awareness about the value of property rights.

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Sources

GIM International (2008) “Land Administration in Vietnam: Volume 22, Issue 9

Hare, Denise. (2008) “The Origins and Influence of Land Property Rights in Vietnam. Development Policy Review, 26

Heritage Foundation. 2001 Index of Economic Freedom (http://www.heritage.org/index/country/Vietnam#property-rights accessed 7/26/2011)

Todaro, Michael, and Stephen Smith. (2009) Economic Development. 10^th  edition. Pearson Education, Boston.

 - Keegan Bailey