Vietnam's Land Policy at a Crossroads
Vietnam’s real estate and land management sectors are on the cusp of significant transformations, marked by an ambitious proposal for digitalizing land use rights certificates (commonly known as “pink books”) and ongoing concerns regarding the calculation of land use fees. These developments, highlighted by recent recommendations from the Institute of Resource Economics and Environment (IREE), underscore a dynamic regulatory landscape that demands close attention from businesses and individuals
The Push for Digital "Pink Books": A Leap Towards Modernization
The Institute of Resource Economics and Environment has formally submitted a proposal to the Prime Minister and relevant ministries advocating for the full digitalization of “pink books.” This initiative suggests integrating land parcel and map sheet identifiers directly with the owner’s national citizen ID number, effectively establishing land ownership and issuing certificates within a digital space.
Legal and Administrative Implications: This proposed digital transformation aligns with the spirit of the 2024 Land Law, which emphasizes the development of a national land information system and a national land database. The benefits are multifold:
Enhanced State Management: A centralized digital database would allow for more systematic and efficient land management.
Fraud Prevention: Digital certificates, linked to national IDs, would significantly reduce the risk of forged “pink books” and illegal land transactions.
Data Foundation: The digital land data would serve as a critical foundation for various other state management functions, including urban planning, construction permits, and the effective collection of real estate transfer taxes.
Streamlined Processes: For landowners, the digital integration promises greater convenience and accessibility, potentially simplifying future transactions and administrative procedures.
While the vision is clear, the implementation of such a comprehensive digital system will undoubtedly involve complex legal and technical considerations, particularly in transitioning millions of existing paper certificates and ensuring robust data security.
Alert: Data Conversion & Accuracy, Cybersecurity Risks, Transitional Period Challenges
Businesses and individuals should proactively verify their land information accuracy in national databases to avoid discrepancies when their paper “pink book” is eventually digitized or when new digital ones are issued.
Be aware of potential cybersecurity risks and use official channels and verify digital credentials to protect against new forms of digital fraud.
Anticipate potential administrative bottlenecks during the transition period as both paper and digital certificates may co-exist.
The Challenge of Soaring Land Use Fees: A Barrier to Development
Alongside the push for digitalization, IREE has also brought to light a pressing issue concerning the calculation of land use fees, especially when converting land purpose for households and individuals. Under Decree 103/2024, it has been observed that land use fees for such conversions have reportedly surged by tenfold to nearly 20 times in some localities compared to the rates under the previous 2013 Land Law.
Economic and Legal Ramifications: This dramatic increase has generated significant public unease and created substantial hurdles for land development:
Deterrent to Conversion: The prohibitive costs are discouraging individuals from converting agricultural or other land types to residential use, impacting urban development and housing supply.
Real Estate Market Impact: High land use fees directly contribute to inflated land prices, thereby negatively affecting the overall health and liquidity of the real estate market.
Revenue Collection Challenges: Paradoxically, the high fees have led to a sharp decline in the collection of land use conversion fees in late 2024 and early 2025, as fewer people are willing or able to pay the exorbitant amounts.
Broader Economic Implications: IREE argues that this situation hampers the nation’s economic growth targets and impedes the government’s efforts to foster the private sector, as outlined in Resolution 68.
IREE attributes this issue, in part, to an alleged oversight in the calculation of the “K coefficient” (or Kn coefficient) within Article 8 of Decree 103/2024, leading to inconsistencies with Article 9. They have urged the government to conduct an objective reassessment of the decree’s impact and address these unintended consequences.
Alert: Impact on Project Viability, Litigation Risk/Dispute Potential, Uncertainty in Future Valuations
- The significantly higher fees can immediately impact the financial viability of planned projects involving land purpose conversion.
- The current “unreasonable” fee increases could lead to disputes with tax authorities or difficulties in transferring land.
- Businesses should be prepared for potential adjustments to land use fees, but also for the possibility that high fees may persist.
Navigating the Landscape Ahead with Henrison Law
The proposals for digital “pink books” and the re-evaluation of land use fees represent two critical facets of Vietnam’s evolving land administration. For businesses involved in real estate development, investment, or any activity requiring land-related transactions, staying abreast of these developments is paramount. Understanding the legal frameworks governing land ownership, valuation methodologies, and digital data integration will be crucial for strategic planning and risk management.
At Henrison Law, we are dedicated to providing comprehensive legal guidance in navigating Vietnam’s dynamic real estate and land law landscape. Our services include:
- Legal Consultation on Land Use Rights: Advising on land classification, land use purpose conversion, and compliance with the 2024 Land Law.
- Real Estate Transaction Support: Assisting with due diligence, contract drafting, and negotiation for land acquisitions, transfers, and real estate projects.
- Dispute Resolution: Representing clients in land-related disputes, including those concerning land use fees, compensation, and ownership.
- Regulatory Compliance: Providing updates and guidance on new decrees, circulars, and government policies affecting land and property.
- Digitalization Advisory: Offering insights into the legal implications and requirements of the proposed digital “pink book” system.
General Alerts:
- Proactively review current land holdings, future development plans, and ongoing projects in light of these potential changes.
- Be aware that high land costs can deter foreign investment.
- Stay updated on further detailed guiding documents (Decrees and Circulars) likely to be issued.
As these discussions unfold and new regulations are potentially enacted, securing comprehensive legal insight is essential for ensuring compliance and optimizing opportunities within this changing environment. Contact Henrison Law today for expert advice tailored to your specific needs.
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