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The Vung Tau Beach Land Revocation: Intourco Resort Forcibly Evicted as Authorities Deem No Valid Reason for Non-Compliance.

2 December, 2024

Vung Tau People’s Committee carried out a forceful land retrieval on the morning of November 18th – Source: Ba Ria – Vung Tau Newspaper

On the morning of November 18th, the People’s Committee of Vung Tau city conducted an enforced land retrieval at the Back Beach area, as a crucial step towards realizing the Thuy Van road beautification project, aiming to complete it by the 50th anniversary of the liberation of the South in April next year.

To execute this project, Vung Tau city had to retrieve and clear the land from nine units. So far, seven units have handed over an area of 13.9 hectares, accounting for approximately 82.75% of the total project area. The remaining two enterprises, Hai Duong International Tourism Joint Stock Company (HaiDuong Intourco) and Vung Tau International Tourism Joint Stock Company (VIR), with a total retrieval area of 38,900 square meters, have not agreed to hand over the land and are filing complaints.

According to VIR, the People’s Committee of Vung Tau city decided to enforce the retrieval of the land managed and legally used by the company, based on the decisions of August 13, 2021, and April 1, 2022, of the People’s Committee of Ba Ria – Vung Tau (BRVT) province. At the same time, they argued that the above-mentioned decisions did not mention VIR, and therefore, “in terms of procedural order and reasons for land retrieval, they are not in accordance with the law.”

Specifically, in the document dated August 13, 2021, the Provincial People’s Committee decided to retrieve more than 28.4 hectares of state-owned land that was leased to Ba Ria Vung Tau Construction and Installation Company (now Real Estate and Investment Joint Stock Company – HOSE: VRC) since 1996 to build the Thuy Van beach in the Back Beach area of the coastal city. The document dated April 1, 2022, was subsequently issued as a supplement, with no significant additions.

VIR stated that they had continuously petitioned the Provincial People’s Committee for a long time without receiving a satisfactory explanation. They also expressed their support for the province’s program and their willingness to hand over the land. “However, without a valid basis for the handover, on November 22, the Company was forced to undergo enforcement, resulting in the dismantling and relocation of assets on the field at the address of 1A Thuy Van, Ward 8, Vung Tau city,” quoted from the company’s information disclosure.

Location of the land where Vung Tau Intourco Resort is operating

However, in the document dated July 25, the Chairman of the Vung Tau City People’s Committee mentioned VIR as the party with assets on an area of 2.4 hectares (entirely within the 28.4 hectares of land mentioned above of VRC) and clearly stated that enforcement measures would be applied to force the dismantling and relocation of assets on this land.

Before proceeding with the formal enforcement, Vung Tau city repeatedly sent documents to the concerned parties, based on the conclusions of the provincial leaders at the meetings with VIR (and HaiDuong Intourco) and pointed out that these two enterprises were secondary units that rented infrastructure and used the land at Thuy Van beach. Therefore, the state’s retrieval of the land use rights from VRC was “correct in terms of the target” and “in compliance with legal regulations.”

The Vung Tau City People’s Committee requested VIR to dismantle and relocate houses and structures on the land area of nearly 2.4 hectares, handing over the cleared land before November 18, 2024.

“In case the Company deliberately refuses to move its assets, the People’s Committee of Ward 8 will proceed to seal and relocate the assets out of the enforcement area, and VIR will be responsible for paying the asset preservation costs according to regulations,” the decision dated November 11 of the Vung Tau City People’s Committee stated.

Relocating assets on the land subject to enforced retrieval – Source: Ba Ria – Vung Tau Newspaper

No Land Lease Contract

The reason why VIR was not mentioned in the above decisions is that, up to now, the enterprise does not have a land lease contract for the area where it operates at Thuy Van beach. Therefore, it does not meet the condition of being a land retrieval object as per the regulations. Also, due to this reason, VIR was not eligible for the government’s policy of rent exemption or reduction for enterprises facing difficulties during the pandemic.

On the other hand, the company argued that the land retrieval decision should be correct in terms of the target. Sharing at the extraordinary general meeting in August, VIR’s Chairman, Nguyen Tuan Anh, said that the company was originally a 100% state-owned enterprise, and the province directly assigned the land to them. They have a construction permit and pay taxes annually. While the province is retrieving the land for the project, the company strongly supports this direction. However, the land retrieval should be correct in terms of the target.

“Up to the present time, the Company has not received a land retrieval decision with the correct target, which means that the state’s land retrieval is not legally valid,” the meeting minutes quoted the Chairman.

Mr. Tuan Anh added that they did not intend to be obstinate or deliberately prolong the issue to create difficulties. Still, they were determined to petition to obtain a separate land retrieval decision for the company, as this would increase the company’s rights.

In addition to the land retrieval, based on the conclusions of the BRVT Provincial Inspectorate in 2018, VIR was also required to pay an additional rent of nearly VND 35 billion for the period 2006-2017, coinciding with the time when the enterprise started to be equitized and separated from the International Tourism Service Joint Stock Company of Ba Ria Vung Tau Province (Intourco, now a major shareholder holding a 41.38% stake). VIR stated that they had fully paid the annual land rent according to the provisional payment notice of the Tax Department of Chi Cuc Thue and, therefore, disagreed with this conclusion.

“Compensation value is not satisfactory”

VIR has also had a compensation plan of more than VND 60 billion for houses and structures on the operating land approved, based on the Provincial People’s Committee’s decision in November 2023.

However, for the person in charge of VIR, the compensation value is “not satisfactory and very low compared to the company’s investment value, seriously affecting the company’s and shareholders’ rights and interests.” The enterprise has also sent a document to the Provincial and Municipal People’s Committees, expressing disagreement with the above amount.

On the balance sheet for 2023, VIR is accounting for total assets of more than VND 101 billion, with half of it in fixed assets. After depreciation, the remaining value of “houses and structures” is nearly VND 50 billion.

The Thuy Van road beautification project was inaugurated on October 28th, with a total investment of VND 1,094 billion – Source: Ba Ria – Vung Tau Newspaper

Difficult business situation, dissolution plan considered

The situation is challenging to the extent that VIR’s leaders cannot even provide an accurate business plan for 2024 due to the “severe impact of having the entire land area and assets of the Company located within the Thuy Van road beautification project,” according to the minutes of the annual general meeting at the beginning of this year.

The enterprise operating at Back Beach stated that they were significantly affected by the media and local authorities’ opinions about handing over the land to the state. The number of guests coming to the resort has decreased considerably, the infrastructure is deteriorating, and room rates have dropped by 20-50% compared to the listed price.

“The Company does not know when to hand over the land, so travel companies do not book rooms, leading to a decrease in room occupancy, and thus, profit,” said Mr. Nguyen Ton Nhon – Member of the Board of Directors and Director of VIR at that time.

Due to the accumulated difficulties of not having a land area to continue business operations, the extraordinary general meeting in August had to consider establishing a Liquidation Committee and propose a plan to support officials and employees in case of termination of labor contracts. However, the subsequent proposals were not approved due to divergent opinions from major shareholders.

Representing the capital of the largest shareholder, Board member Duong Thanh Tuan, expressed the view that as Intourco is a state-owned enterprise, they are very cautious in decision-making and that it is “very difficult to explain this loss-making business to shareholders.”

VIR’s business results were significantly affected by COVID-19 and the land retrieval issue.

Tu Kinh