The Director of the Institute of Resource and Environmental Economics in Ho Chi Minh City has proposed to the city’s People’s Committee Chairman, Nguyen Van Duoc, to increase the price of agricultural land in the land price framework to 65-70% of residential land prices to reduce land use fees for locals.
Decision 79/2024, which amends and supplements Decision 02/2020 on land prices in Ho Chi Minh City, has greatly aided the city’s authorities in matters of compensation, resettlement, land rent calculation, and taxation.
However, the current land price framework sets agricultural land prices too low, resulting in budget shortfalls as locals have withdrawn their land transfer tax dossiers over the past time.
The Institute of Resource and Environmental Economics has conducted a scientific assessment of the market impact following the implementation of the land price framework per Decision 79/2024. The results indicate that the increased land prices have negatively affected the overall market in the city.
The Institute proposed adjusting agricultural land prices in Decision 79 to 65-70% of residential land prices.
This has led to reduced budget revenues from land-use conversion, hindered the real estate market, and caused a significant downturn in the construction materials market due to limited new construction by locals. These changes have had a clear ripple effect on people’s lives, affecting business premises rentals, purchasing power, and consumption. It is also expected to impact the city’s double-digit growth target for 2025.
According to Dr. Pham Viet Thuan, Director of the Institute of Resource and Environmental Economics, locals now have to pay 250-300% more in taxes when converting agricultural land to residential land due to the significant price gap between the two land types in the city’s land price framework. This has resulted in many locals being unable to afford the increased land use fees, calculated by subtracting the agricultural land price from the residential land price.
To ensure objectivity and compliance with the Land Law 2024, with the new land price framework coming into effect on January 1, 2026, the Institute recommends that the Chairman of the Ho Chi Minh City People’s Committee re-evaluate the low agricultural land prices, which lack scientific basis and do not adhere to market principles as stipulated in Decree 71/2024.
Therefore, to address the challenges faced by locals and increase budget revenues, the land price framework needs to be adjusted for the last six months of 2025, before the new land price framework takes effect on January 1, 2026, for the newly merged Ho Chi Minh City. The authority to make this adjustment lies with the Chairman of the Ho Chi Minh City People’s Committee, and it complies with the Land Law and related legal provisions.
The Institute of Resource and Environmental Economics proposes adjusting agricultural land prices in Decision 79 to 65-70% of residential land prices within the land price framework. This adjustment applies to agricultural land parcels located within residential areas or those with residential land on the same parcel.
