The Ministry of Finance (MOF) has proposed to allow state owned enterprises (SOEs) to sell the land plots and houses they do not use to get money for production and investment. However, economists have warned that this may lead to the “real estate bleeding.”

In general, the SOEs which were established soon after the liberalization had the opportunities to choose the land plots on advantageous positions for their head offices. The Vietnam Railway Corporation, for example, has the office located at No 136 Ham Nghi Street in district 1 of HCM City, while the Electricity of Vietnam’s head office is situated at No. 75 Dinh Tien Hoang, in front of the Hoan Kiem Lake in Hanoi.

Because of the historical conditions, the Southern Food Corporation in HCM City, which was in charge of distributing food to people in the subsidization period, has developed a network of 351 retail points located in every district of the city 

It happens that while located on the “golden land areas” with high commercial values, the enterprises do not need to use all the areas and they do not fulfill the finance duties for the land allocated to them.

MOF has estimated that state owned economic groups and general corporations are holding 155 million square meters of land. Many of the enterprises do not use the land for themselves, but lease to private businessmen for profit. While the SOEs have unused land, other economic institutions do not have land to do their business.

A lot of SOEs have sold their houses and workshops to get money to restructure enterprises. The Southern Food Corporation has got the nod from the Ministry of Finance to restructure 233 out of the 351 retail premises. About 30 percent of the premises have been retained for business activities, 2 percent have been used for other purposes, 2 percent of land has been assigned to others, and the remaining has been taken back by the State which is now put under the control of the local authorities.

Nguyen Hong Nam, Deputy General Director of the Southern Food Corporation said that when the corporation was asked to relocate production workshops, the corporation has to choose new suitable places and sell the land in the inner city to get money for capital.

“We are seriously lacking capital,” Nam said.

The sum of money the food corporation got from selling houses and land use right transfer deals is really a big sum. According to MOF, the corporation got 727 billion dong which has been all used to build up the storage houses and production workshops.

Many other SOEs have followed the move. The Vietnam Tobacco Corporation has got 1.8 trillion dong from selling three workshop premises in the inner HCM City. The sum of money has been used to relocate the tobacco factory to industrial zone.

The Vietnam Textile and Garment Group has used 259.6 billion dong from land and house sales to move the workshops that cause environmental pollution to an industrial zone and develop the supermarket chain in southern provinces.

Also according to the Ministry of Finance, of the 155 million square meters held by SOEs, the restructuring has been carried out for 9 million square meters. However, the ministry’s report does not clearly show how the land has been used for what purposes and who has obtained the right to use the land.

The ministry has also reported that the total sum of money collected from the restructuring is 15 trillion dong. However, analysts believe that the figure proves to be too modest if compared with the vast land area of 9 million square meters I total.

Source: TBKTSG