Under-the-table fees push urban area land prices up

Posted on August 23, 2012

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Hanoi has announced that it would take back the land from 11 enterprises because the land allocation is believed to violate the Land Law. The announcement has put the enterprises on the tenterhooks.

Under-the-table fees equal to the land money

The enterprises feel regret the huge sums of money they had to spend before to get the land plots allocated.

H, Deputy General Director of an enterprise, has received a notice that the 10,000 square meters of land in the suburbs would be taken back by the city authorities.

Of course, H does not want to give the land area back to the state. He said that the sum of money he paid to the seller some years ago to buy the land plot was just a small part if compared with the sum of money he had to spend to “lobby” local officials.

“The land plot is located on a very advantageous position and has every condition needed for us to set up production workshops. Meanwhile, the infrastructure system was also good,” he said. Therefore, H accepted to spend a big sum of underground money to obtain the land.

According to H, all businesses have to obey the “laws” and the “price policies” to get land allocated. In 2008, one hectare of land with infrastructure items in the suburbs had the cost of 10 billion dong, while one hectare with no infrastructure items 5 billion dong.

However, businesses not only need to have money, but also need to have good relations with local authorities as well, to be able to receive the land plots they wanted.

“Someday I had to attend five parties with local officials to discuss the costs for the land” he said.

P, another director, has revealed that the land plot to be taken back by the city authorities covers an area of 20,000 square meters in a district belonging to the former Ha Tay province.

In 2007, the company was handed over the land plot with the financial cost written down on books at one billion dong. However, P said, this did not include the under-the-table fees he had to pay to local officials.

“At that time, I had to spend 5-7 billion dong to “go through” different doors of local management departments,” he said.

Who to blame, authorities or businessmen?

H admitted that it was the violation of the Land Law when his business bought back 10,000 square meters from another enterprise. However, H said the purchase deal was certified by the local authorities. Therefore, the violation should not be blamed on the enterprise only.

H said he has been moving heaven and earth to discuss with the state management agencies about the land plot. He many times met the leaders of the Hanoi Construction Department, but he failed to persuade them.

He affirmed that it is unfair to take back land from his business, while other enterprises, which make similar violations, have not been punished.

Of course, when taking back the land plots, the city authorities would not compensate businesses. “Under-the-table fees” is not a legalized concept. Therefore, businesses would not be able to claim the fees back.

Meanwhile, Deputy Director of the Hanoi Department for Natural Resources and the Environment Nguyen Huu Nghia has affirmed that it is necessary to take back the land plots which have been left idle for a long time. Meanwhile, the State would reimburse the investors, if the investors have developed projects on the land.

Kim Chi

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Posted in: Corruption