The risk of rising land prices "threaten" development. Part 2

The delay in determining annual and one-time land lease prices has affected the investment environment, impacting production and business planning, and hindering mortgage financing for investment, especially for large-scale investment projects with significant capital (such as the LNG storage and port project, the Son My I and II thermal power plants, and the wind turbine blade manufacturing project...). Without a prompt and decisive policy, this will negatively affect the investment environment and the province's investment attraction results – the Provincial Industrial Parks Management Board stated.

One side is impatient, the other is cautious.

While NovaWorld Phan Thiet is awaiting specific land prices to "unlock" further construction activities to complete its economic and tourism urban area by the end of 2025, new industrial parks in Ham Tan are also waiting for specific land prices to be determined before leasing land. Only then can construction proceed according to the planned schedule. For example, Tan Duc Industrial Park is scheduled to begin construction in Q2/2023, but it is considered difficult to implement due to delays in the process of establishing, appraising, and approving specific land prices (for residential and agricultural land within residential areas). This requires numerous revisions and additions, impacting compensation and resettlement efforts. Currently, the industrial park's investor has submitted an application for land allocation/lease covering 61.17 hectares. However, the non-contiguous nature of the land plots will make land allocation/lease and obtaining construction permits more challenging. Regarding Son My I Industrial Park, the investor has been allocated 76.78 hectares of land in the first phase by the Provincial People's Committee. However, to proceed with construction, a specific land price is needed to sign a land lease contract. Previously, the Department of Natural Resources and Environment organized a bidding process and signed a contract with a consulting firm (TMS Consulting Co., Ltd.) to determine the land lease price. After numerous urging letters, the consulting firm reported that the delay in determining the specific land price for Son My I Industrial Park was due to limited and difficult survey and information gathering to determine revenue and costs related to the valuation of industrial park projects, and insufficient evidence to fully prove the requirements stipulated in Circular 36/2014/TT-BTNMT dated June 30, 2014, of the Ministry of Natural Resources and Environment . Therefore, on April 5, 2023, TMS Consulting Co., Ltd. sent a document requesting relevant units to assist in reviewing information for land valuation purposes, along with a draft explanatory report on the valuation results. And to this day, we are still waiting for… the results.

Therefore, at the end of April 2023, the Provincial Industrial Parks Management Board submitted a report requesting relevant functional agencies to support Tan Duc Industrial Park in completing the procedures to start construction in the second quarter of 2023, from determining the specific land price so that the investor can sign a land lease contract for the 61.17 hectares. Similarly, for Son My 1 Industrial Park, covering over 76.7 hectares, the plan was submitted to the Provincial People's Committee for approval in May 2023 as requested by IPICO Company, so that the company could pay land rent, sign land lease contracts, and organize the construction of industrial park infrastructure on this area.

Notably, the investors of industrial parks who have been carrying out land compensation and clearance work and preparing for investment all wish to lease land in a single lump sum. Related projects such as the LNG storage and port facility, the Son My I Thermal Power Plant Project, and the Son My II Thermal Power Plant Project, which have approximately 300 hectares of land, also have a need for a single-leasing land lease. Meanwhile, according to information from the Provincial Industrial Park Management Board, because the specific land price has not yet been determined, four projects (with an area of ​​4.72 hectares) in Ham Kiem I Industrial Park and one project (with an area of ​​2.41 hectares) in Ham Kiem II Industrial Park have been approved by the Provincial People's Committee for a single-leasing land lease payment, but the investors have not yet paid the land lease fee in a lump sum, a delay that has lasted for three years. The investors' desire for a single-leasing land lease facilitates attracting secondary investors and simplifies accounting and loan applications for project implementation.

Why are they in a position of coercion?

Representatives from the Department of Natural Resources and Environment stated that the delay in appraising specific land values ​​(applied to projects with land values ​​exceeding 20 billion VND) is due to several reasons. According to Circular 36 of the Ministry of Natural Resources and Environment, there are five methods for land valuation, but the three most commonly applied methods – surplus, income, and comparative – have been used for a long time. However, based on information from several cases, consulting firms are concerned that these methods are not entirely reliable when applied to specific projects, especially when the input factors are not properly considered, leading to inaccurate output results. For example, with the comparative method, the area in question has historically been agricultural land with no transactions, making comparison impossible. Similarly, the surplus and income methods require determining development revenue, investment capital per unit, unit prices, etc., which are very complex. Therefore, the consulting units have repeatedly revised the plans, and the department has been assisting them, but the results obtained are not yet convincing. Because assumptions and estimates are necessary, and these projects all have very large areas, the risk of errors between different people, even very small ones, can lead to significant losses. Furthermore, the Ministry of Natural Resources and Environment is also revising Circular 36, focusing on valuation methods.

That is also one reason why the Provincial People's Committee recently sent a document to the Ministry of Natural Resources and Environment requesting the Prime Minister to consider and direct the establishment of a working group comprising members from the Ministry of Natural Resources and Environment, the Ministry of Construction , the Ministry of Finance, and other relevant ministries and agencies to support and guide Binh Thuan province in determining land prices in general and at the Ocean Valley Tourist Complex project in particular. Currently, the central government has issued a document agreeing to support Binh Thuan in the specific land valuation at the NovaWorld Phan Thiet project…

According to a representative from the Department of Natural Resources and Environment, compared to NovaWorld Phan Thiet, land valuation in industrial zones is simpler. However, in the current circumstances, a specific valuation calculation with assistance from the central government is still needed for greater confidence. The obstacles related to specific land prices for large projects in the province will be resolved as soon as possible.

The official letter from the Provincial People's Committee to the Ministry of Natural Resources and Environment also emphasized that the current land valuation process is extremely complex because it involves many sectors and fields regulating parameters related to investment, planning, construction, land, finance, banking, and the market. This requires those performing the task to have general knowledge and experience related to many fields in order to fully understand the content of the valuation methodology for appropriate implementation, appraisal, and evaluation. Meanwhile, the personnel of the Provincial Department of Natural Resources and Environment lack sufficient experience in specialized fields such as pricing, finance, and construction to meet the demands of the current complex valuation work. Therefore, the Provincial People's Committee requests the Ministry of Natural Resources and Environment to propose to the Prime Minister to consider and direct the establishment of a working group to support and guide Binh Thuan province in determining land prices in general and at the Ocean Valley Tourist Complex project in particular, so that the projects can be implemented and put into operation soon, contributing to the socio -economic development of the locality.

Source: https://baobinhthuan.com.vn/nguy-co-gia-dat-de-doa-su-phat-trien-bai-2-109212.html