“Uncovering the Schemes Behind Land Price Manipulation”

Interviewer: Can you decipher and expose the tactics employed by speculative groups to manipulate land prices, Mr. Tran Xuan Luong?

Mr. Tran Xuan Luong: Speculative groups often employ cunning strategies to profit from the land market. One common tactic is price manipulation through fake auctions. They organize auctions with shell companies or representatives to drive up land prices beyond their true value. Subsequently, this group immediately resells the land at a significant markup. As a result, land prices surge abruptly, failing to reflect their actual worth.

Furthermore, manipulating planning information is another frequent tactic. Speculative groups often collude with officials to obtain planning information before its public announcement. This enables them to purchase low-value land parcels and subsequently inflate their prices when the planning information is officially disclosed. This situation not only distorts the real estate market but also creates inequality and negatively impacts the interests of the people.

Another strategy employed by speculative groups is to invest in land parcels within a specific area beforehand. Prior to official auctions, these groups quietly buy land in neighboring areas at low prices. Then, during the auction, they drive up the prices of the new land parcels, creating a sense of price escalation for the entire region. When land prices peak, they sell the previously invested parcels at a substantial profit, reaping enormous gains.

What consequences does this have, Mr. Luong?

Mr. Tran Xuan Luong: The repercussions of uncontrolled land auctions are severe, distorting the market and potentially leading to far-reaching economic and social implications.

Firstly, it creates a real estate bubble: When land prices are pushed to unreasonable levels, the real estate market becomes susceptible to a “bubble.” The value of land is inflated far beyond its true worth, creating the risk of a bubble burst during market corrections. The collapse of the real estate market can lead to financial crises, erode investor confidence, and inflict significant damage on the economy.

Secondly, it affects those with genuine needs: Soaring land prices reduce access to land for those with legitimate needs, such as building homes or investing in businesses. These individuals face significant challenges in finding affordable housing or suitable business locations. This not only exacerbates social inequality but also hinders sustainable economic development.

Thirdly, it leads to land resource wastage: Land is withheld for speculation rather than being utilized for its intended purpose, resulting in the wastage of this precious resource. Land parcels that remain undeveloped or are left abandoned for extended periods after auctions not only depreciate in value but also impact urban development plans. Consequently, economic growth stagnates, and national resources are squandered.

“Reclaiming Land in Cases of Auction Winner Violations or Failure to Develop”

Interviewee: In your opinion, what measures are necessary to prevent this situation?

Mr. Tran Xuan Luong: To curb uncontrolled land auctions, decisive and integrated actions are required from the government.

Firstly, stringent oversight of the auction process: Enhanced supervision of land auctions, increased auction deposits, and transparency regarding participant information are imperative. These measures will help deter the involvement of speculative groups and ensure fair and transparent auctions.

Secondly, tax policy reform: International experience suggests that an effective measure to curb speculation is to impose high taxes on unused or speculated land. Taxes should also be levied on short-term land transactions to deter speculation and money laundering. However, we have not been able to implement this effectively due to a lack of data, information, and expertise in land valuation compared to international standards. As a result, we are still struggling to address the root cause of the problem in line with Resolution 18 of the Central Committee.

Thirdly, integrated planning and development: The government should focus on developing social housing and satellite cities to alleviate pressure on land prices in central and peripheral areas. Land use planning must be implemented comprehensively and with a long-term vision to ensure efficient and sustainable land utilization. Emphasize the development of housing while limiting land transactions.

Fourthly, stringent bidder qualification assessment: Auction participants should be required to demonstrate legitimate financial capabilities and clear land use intentions. This helps deter speculation and money laundering. Additionally, auction winners must commit to using the land for its intended purpose within a specified timeframe. Failure to comply may result in land reclamation and legal consequences, including forfeiture.

Fifthly, enhancement of the land information system: The state needs to establish and improve land information databases, particularly land price data. Land valuation should be based on objective, scientific, and transparent criteria, providing a foundation for fair and accurate land auctions. Simultaneously, this data will assist tax authorities in accurately calculating financial obligations for land transactions, thereby reducing speculation and tax evasion.