Businesses must sell off assets to have enough money to pay

Many businesses said that the recent increase in land rents has put them on the brink of bankruptcy.

Not enough to pay the rent

Faced with the situation where many coastal resort businesses in Da Nang simultaneously called for help because land rents had increased by a shocking 360-400%, leaving them in dire straits, on October 11, Mr. Ho Ky Minh, Vice Chairman of the Da Nang People's Committee, together with leaders of departments, agencies, and branches, inspected a number of coastal land lease projects.

At the Melia Da Nang Tourist Area Project, Mr. Nguyen Manh Trung, the investor, said that the construction part of this project only accounts for a very small part, the rest is landscape, trees, and internal roads. However, the investor must pay all land rent at the price of commercial and service land.

According to Mr. Trung, in the 2017-2021 cycle, his company had to pay the city more than 7 billion VND/year in land rent, but in the 2022-2026 cycle, the land rent increased to more than 27 billion VND/year.

According to the investor, the year of the COVID-19 pandemic, the revenue was 1 billion VND but the land rent was 7 billion VND. In 2022, the company closed for half a year, the revenue was 36 billion VND, the land rent was 27 billion VND, accounting for 70%. Therefore, in order to pay the land rent, Mr. Trung had to sell his house and assets accumulated over many years to make up for it, otherwise, if he paid late, the company would be forced to pay and have its account frozen.

Mr. Ho Ky Minh, Vice Chairman of Da Nang City People's Committee (left) works with businesses.

“ If the city does not fix land rental prices, many businesses will continue to close and go bankrupt, and workers will lose their jobs and face more difficulties, ” Mr. Trung suggested.

Mr. Trung also said that currently, the land price list for the 2020-2024 cycle is not suitable for the actual land rental price due to the impact of the COVID-19 pandemic and the market land price has decreased by more than 50%. In addition, it is unreasonable to price commercial and service land at 70% of the residential land price. In fact, in the market, the price of commercial and service land is 30-50% of the residential land price.

Therefore, he proposed that the People's Committee of Da Nang City and the Department of Natural Resources and Environment hire an independent valuation organization to re-evaluate the land rental price according to the current market price. Valuation of commercial and service land in 2023 is based on the specific land use in the eastern area, where projects have land use coefficients and density very different from residential land and commercial and service land in the surrounding area.

“ The deadline for paying land rent in 2023 is approaching. If our recommendations are not resolved soon, many more businesses will have to suspend operations, close down and go bankrupt, ” Mr. Trung shared.

At the Ariyana Danang Resort Complex Project, Mr. Le Minh Kha, the investor representative, said that the project has a total area of 26.7 hectares, of which 22.7 hectares are rented land with annual payment.

In the previous cycle, the company paid 32 billion VND in land tax. However, currently, the land rent the company has to pay is up to 121 billion VND. Due to not having enough money to pay, the company has been forced to pay tax.

In the current situation, land rent is a burden for businesses. Revenue from exploitation projects is not enough to pay land rent.

According to Mr. Kha, the Ariyana Danang Resort Complex Project has a construction density of only 18%, the rest is landscape, trees, internal roads, but businesses still have to pay land rent according to the commercial and service land rent price.

From there, Mr. Kha proposed that the Da Nang government develop a rental price based on land use functions. At the same time, he proposed to consider issuing a land rental price suitable for coastal projects because of the specific land use and very low construction density compared to neighboring areas.

Find the right solution

At the inspection, Mr. Ho Ky Minh, Vice Chairman of Da Nang City People's Committee, acknowledged the recommendations of the enterprises and shared the difficulties they are facing.

At the same time, the Vice Chairman of the People's Committee of Da Nang City also requested departments and branches to study and propose solutions to the City Party Committee, People's Council, and People's Committee in accordance with legal regulations.

“ The city leaders will have a meeting to listen to the voices of local businesses on this issue. If necessary, the city leaders will have additional separate meetings with each business. The city will resolve any issues that are within its authority, and will report and make recommendations to higher authorities for issues that are beyond its authority ,” said Mr. Minh.

Regarding this issue, previously, businesses (operating in the tourism sector in coastal areas of Son Tra and Ngu Hanh Son districts) such as Sao Viet Non Nuoc Company Limited, 559 Investment Joint Stock Company, Danang San Ho Trading and Tourism Joint Stock Company, Que Viet Joint Stock Company, My Phat Joint Stock Company, Thien Thai Hotel and Tourism Joint Stock Company) sent a collective petition to the City Party Committee, People's Council, and People's Committee of Da Nang City, reflecting that land rent is too high.

In the petition, the enterprises made three recommendations, including allowing enterprises to continue renting land at the price frame before 2020; the People's Council and People's Committee of Da Nang City proposed that the National Assembly and the Government not adjust the land rental price increase during the period affected by the COVID-19 pandemic (2020-2023) and that the enterprises' accounts not be frozen, and their assets not be seized due to land rental debt due to the impact of the land price increase of up to 300-400%.

Based on the petition of the enterprise, the leader of the People's Committee of Da Nang City assigned the Department of Natural Resources and Environment to advise the leader of the People's Committee to establish a team to inspect a number of coastal land lease projects in the area.

The leaders of the People's Committee of Da Nang City assigned the Department of Natural Resources and Environment to coordinate with the Department of Finance, the Tax Department and relevant agencies to provide complete and accurate information on land prices and policies and solutions implemented to support businesses in the recent past and solutions in the coming time to inform people and businesses in the area.

CHAU THU

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