Fuelled by inconsistent land management and historical ambiguity over land use rights, land disputes remain a persistent problem in Vietnam. While these disputes rarely affect foreign investors, it is a thorny political issue that the CPV will need to resolve.
On 9 January 2020, a clash between protestors and the police over a longstanding land dispute in Dong Tam village in suburban Hanoi left three police officers and one villager killed, and another civilian injured. The incident, which is the most lethal one in years, highlighted land disputes as a major source of social conflicts in Vietnam.
The 2013 Constitution of Vietnam stipulates that land is “owned by all the people, and represented and uniformly managed by the State”. This legal provision together with the lax and inconsistent land management by many local authorities has created a fertile ground for land disputes to emerge, especially where historical events created ambiguity regarding land use rights over time.
In the case of Dong Tam, the dispute was over a land plot adjacent to a military runway that the government wanted to recover to hand over to Viettel, a military-run conglomerate, to build a manufacturing facility. Officials claim that the land has belonged to the military since 1968 and it is the villagers who illegally occupied it. Protestors, however, say that the plot is outside the military land area and has been part of the farmland cultivated by them since at least the 1980s, for which they duly paid land fees and taxes to the government.
The government condemned the violence by protestors and alleged them to be “criminals” who should be dealt with seriously by the law. As murder charges have been brought against the villagers involved, and with the death of the lead protestor in the incident, the dispute may soon de-escalate, and the government may be able to settle the dispute on its terms. However, due to the nature of Vietnam’s land regime, similar disputes will likely continue to emerge elsewhere, posing a considerable challenge to the Communist Part of Vietnam (CPV) and the government.
Land disputes have long been a major source of social conflicts in Vietnam. Apart from disputes over land ownership like the one in Dong Tam, disputes over compensation amount paid to affected residents are also common. In most of the cases, corruption makes the situation worse, as corrupted officials colluded with investors and arbitrarily grabbed land from residents at low compensation price to hand over to investors who would later resell the land at much higher prices. Even in public projects for national development purposes, the low compensation amount given to land owners also generated grievances. Large groups of land owners gathering at central offices of the CPV to demand justice has long been a common scene in Hanoi.
In order to address the issue, certain experts and activists have called for the state to recognize private ownership of land.
In order to address the issue, certain experts and activists have called for the state to recognize private ownership of land. However, despite vibrant debates on the issue during the revision process of the 2013 Constitution, the National Assembly, concerned about political, economic and national security consequences of such a proposal, decided to retain the collective land ownership regime.
Nevertheless, the CPV and its government are well aware of the combustibility of the land dispute issue and have tried to address it through other avenues. The 2013 Land Law, for example, provides that for commercial projects, local governments would no longer claim land from residents on investors’ behalf. Instead, developers would have to negotiate directly with land owners to settle the land price. Although this new provision has reduced the number of land disputes involving private developers, it also contributed to the hike in land price in recent years. Meanwhile, land disputes involving public projects continue to persist and become even more common, partly because the government try to keep compensation price low. Even when local governments periodically revise reference prices for land under their management, there is still a big gap between state-sanctioned prices and market prices. As such, more land disputes involving public projects or projects for which the state recovers land on behalf of state-owned enterprises like the Dong Tam case should be expected in the future.
Foreign investors, in order to avoid potential land disputes, normally choose to lease land in industrial parks where land has been cleared by park developers. For projects outside industrial parks, investors, mostly property developers, normally choose to acquire clean and cleared land from other investors rather than engaging in direct negotiations with local residents. In other cases, they establish a joint venture with a local partner, who will be responsible for acquiring the land. Once the land has been secured, the foreign investor may make arrangements to buy out the local partner to wholly own the land.
As such, land disputes similar to the Dong Tam case generally do not happen to foreign investors and will have little impact on the business environment of Vietnam. Instead, it’s largely a political issue that will mainly generate implications for the CPV and the government only.