Bloomberg News

Shootout Makes Land Disputes Vietnam’s Priority

July 11, 2012

Shootout Makes Land Disputes Vietnam’s Priority

Nguyen Thi Thuong, wife of fish farmer Doan Van Vuon, stands by the ruins of her house in Haiphong, Vietnam, site of a dispute that ended in violence, on Feb. 4, 2012. Photographer: Nguyen Hung, VnExpress/AP Photo

First came the police and men in uniforms, then the beatings and the bulldozers, said Nguyen Thi Kiem. Within hours, her home and 165 others had been razed -- four generations of rice farms reduced to flattened earth.

“They came and forced us off,” said Kiem of the police and other officials who ejected residents of her village on the outskirts of Hanoi on April 24 to make way for a new suburb. “That is my home they are taking away. Now I have nothing.”

Five weeks later, Kiem had joined hundreds of other evicted farmers from around the country to camp in the rain outside government offices in the capital, fighting land clearances they don’t understand and that are often beset by allegations of corruption or unfair compensation. The protests have become a priority for Prime Minister Nguyen Tan Dung, superseding labor strikes, rising prices and bankruptcies that have pulled the currency down 20 percent in four years.

“It’s the key issue, it’s well overtaken inflation and the decline of the dong which have dominated since the financial crisis,” said Carlyle Thayer, a professor at the Australian Defense Force Academy in Canberra, who has studied Vietnamese politics for 45 years. “Investors’ concern should be about general destabilization. The confrontations have picked up.”

The prime minister said land management was inadequate and called for a national review of procedures after a dispute in the northern city of Haiphong ended in violence, the government said on Feb. 10 on its website. Fish farmer Doan Van Vuon and family members shot six police officers and detonated a landmine at his home on Jan. 5 as local authorities tried to expel them, according to the government’s website.

Labor Strikes

Land disputes are another setback for the ruling Communist Party after the fastest inflation in Asia last year sparked labor strikes at local units or suppliers of Honda Motor Co. (7267), Panasonic Corp. (6752) and Adidas AG. (ADS) Economic growth was below 4.5 percent for the first two quarters, the weakest since 2009, while the stock market has slid 17 percent from its May 8 peak this year.

“As a core constituency for the Communist Party, the farmers can make the Politburo pretty anxious,” said Ernest Bower, director of the Southeast Asia program at the Center for Strategic & International Studies in Washington. “The explosive land dispute near Haiphong earlier this year gives the Party real heartburn. It’s a no-win situation politically. They must move forward with development to support their competitiveness.”

The social and economic turmoil contributed to a 28 percent decline in foreign direct investment in the first half of 2012 from a year earlier. As wage costs rise in China, Vietnam is competing with Cambodia, Indonesia and other Southeast Asian nations to attract manufacturers looking for cheaper production.

Timber Sale

Tran Ngoc Anh, 46, traveled 1,700 kilometers in May to Hanoi from the southern coastal province of Ba Ria Vung Tau to fight against the seizure of her family’s land two decades ago. She says she started protesting in 2001 after discovering the local officials leased some of the land to a state timber company and sold lots to other households.

Anh says she was beaten by police and jailed after she tried to set herself alight in 2009 outside the prime minister’s residence “to show him the pain citizens have to suffer.”

Prime Minister Dung ordered government agencies to resolve all 500 outstanding land complaints this year, Nguyen Sinh Hung, the National Assembly chairman, told lawmakers in Hanoi on June 13. About 80 percent of all complaints filed to the government are related to land disputes, Hung said. The Ministry of Foreign Affairs said in a faxed response to questions that it had “no knowledge” of any abuse of protesters involved in land disputes.

Property Boom

Many confrontations are over compensation in a market where average asking prices for high-end condominiums in Hanoi more than tripled since 2004, according to data from the Vietnam unit of CBRE Group Inc. (CBG:US), the world’s biggest commercial property broker.

Compensation for land clearances was the most pressing issue for Vietnam’s provincial governments, according to a 2010 survey cited by the World Bank, with more than 80 percent of respondents dissatisfied with the way it was calculated.

“The land laws are inadequate to deal with Vietnam’s rapidly changing property market,” said Eddy Malesky, an associate professor in the Graduate School of International Relations and Pacific Studies at University of California, San Diego. “There is just no way they can make the price the government makes decisions on, and compensates people on, keep up with market pricing.”

The land that once produced rice for Kiem and her neighbors in Hung Yen province is slated for the next stage of Ecopark, a suburb of 20,000 villas and apartments, with schools, shops and a golf course on an area larger than New York’s Central Park.

Rising Offer

Kiem, 60, said she was initially offered the equivalent of $2.63 per square meter, with the price rising three times to $7.18.

“They can’t force us to take it,” she said outside the Central Propaganda Committee for Citizens in Hanoi. “That price is too low and then they sell it for 100 times that.”

Apartments to be built at Ecopark were offered at a minimum $886 per square meter in a promotion for early buyers in May last year, according to the website. Viet Hung Urban Development & Investment JSC, Ecopark’s developer, declined to answer questions on the project.

The company will pay as much as 200 billion dong in total to families that volunteer to hand over land in villages near Kiem’s for the project, Lao Dong newspaper reported today, citing the developer. The cash, a supplement to the money villagers would receive from land clearance compensation, is intended to help 2,397 households resettle their assets and crops, according to the report.

The World Bank says the failure of some projects to provide clear and adequate compensation raises the cost of development and increases risk for investors.

“Major shortcomings in the compensation rate have led to the delay of projects, pushing the infrastructure investment rate too high,” the World Bank said on its website. “Lawsuits cause prolonged social instability and reduce the attractiveness of the investment environment in Vietnam.”

Vietnam’s land protests mirror similar incidents in China, said Thayer at the ADFA in Canberra, part of New South Wales University.

China Disputes

Chinese Premier Wen Jiabao said in December that China “can no longer sacrifice farmers’ land ownership rights,” the Xinhua News Agency reported. Strikes, demonstrations and other protests in China doubled to at least 180,000 in 2010 from 2006, according to Sun Liping, a sociology professor at Beijing’s Tsinghua University. Land disputes are the leading cause of social unrest in China, an official study said last year.

“Vietnam looks very, very carefully at what’s occurring in China,” Thayer said.

Still, China’s ability to evict citizens to build roads, dams and factories helped fuel the country’s rapid economic development in the past two decades, said Adam McCarty, chief economist at Mekong Economics in Hanoi.

“In China, in three years they can get a big infrastructure project done and finished and any households in the way get brushed aside,” McCarty said. “In Vietnam it is far more complicated and slow.”

--Nick Heath. With assistance from Nguyen Kieu Giang, Diep Ngoc Pham, Nguyen Dieu Tu Uyen and K. Oanh Ha in Hanoi. Editors: Adam Majendie, Lars Klemming

To contact the reporter on this story: Nick Heath in Hanoi at nheath2@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • CBG
    (CBRE Group Inc)
    • $30.32 USD
    • 0.26
    • 0.86%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus