Impact of Adjusting Land Price Table in Ho Chi Minh City on Business Activities

The adjustment of the land price table in Ho Chi Minh City is causing severe financial pressure on businesses, particularly as land rental costs may increase by billions of VND. This poses a major challenge to the ability of businesses to sustain production and operational activities. In this context, businesses face the dilemma of seeking effective financial solutions to mitigate the negative impacts. At the seminar organized by the Ho Chi Minh City Business Association (HUBA) on November 9th, Mr. Tô Ngọc Ngời, General Director of Lâm Sản Sài Gòn Production and Import-Export Joint Stock Company, emphasized that the application of the new land price table would significantly increase land taxes, thereby negatively affecting profitability and the ability to invest in development.

For commercial service land such as warehouses, offices, or low-density construction areas, rental costs may increase substantially. Specifically, Mr. Ngời mentioned a plot of land with an area of 1,325 square meters on Trương Định Street, District 3. According to the old land price table, the annual rent was 4.2 billion VND, but under the new price table, this cost may exceed 6.1 billion VND, an increase of approximately 30%. He argued that such an increase is beyond the capacity of businesses and could force them to reduce their operations or even shut down.

Ms. Bùi Thị Nữ, Deputy Head of the Investment Supervision Department of Export Processing Zones and Industrial Parks Management in Ho Chi Minh City, stated that there are currently 17 export processing zones and industrial parks across the city, 11 of which are still subject to the new land price table as they are paying annual state land rentals. This means that these zones and parks will face increasing land rental costs, thereby weakening their competitiveness compared to other regions. Currently, land rental in industrial zones is calculated at a rate of 0.25-3% annually. The Ho Chi Minh City Business Association and the Ho Chi Minh City Real Estate Association are both concerned that the new land price table could lead to an increase in rent for non-agricultural business land by 35-50%, while rental costs for commercial service land may increase by 18-53%.

Nguyễn Ngọc Hòa, Chairman of HUBA, argued that this increase could pose serious challenges for businesses in maintaining production, expanding operations, and attracting new capital investments. He stressed that without appropriate support policies, small and medium-sized enterprises will face many difficulties, which could have serious implications for the economy of Ho Chi Minh City and the entire country. The sudden rise in land rental costs not only reduces profit margins but also introduces uncertainty, making it difficult for businesses to plan their long-term strategies.

Mr. Đào Quang Dương, Deputy Head of the Economic Land Department of the Ho Chi Minh City Department of Natural Resources and Environment, pointed out that the new land price table has profound impacts on businesses that need to pay annual land taxes and non-agricultural land use taxes. For non-agricultural land use taxes, this regulation remains stable for a five-year cycle, meaning that there will be no change until the end of 2027. However, for businesses that need to pay land tax annually, an increase in the land price table will lead to higher taxes, creating significant financial pressure, particularly in the context of the complex challenges faced by the global economy.

To mitigate negative impacts, many businesses and associations have proposed adjusting the rental rate for agricultural land to 0.25%, land in high-tech zones and the Quang Trung Software Park to 0.3%, and rental rates for commercial service land to be between 0.5-1%. These proposals are expected to help businesses alleviate financial pressure, maintain stable operations, and create more favorable conditions for the investment environment in Ho Chi Minh City. Additionally, the stability of land rental policies is seen as an important factor that allows businesses to make long-term plans and implement expansion strategies.

Experts unanimously believe that the sudden increase in land rental costs could force some businesses to readjust their development strategies or even withdraw from the Ho Chi Minh City market. This would not only cause losses to businesses but also diminish the city's attractiveness for investment. Ho Chi Minh City, as the largest economic center in the country, must maintain competitiveness to attract investors from both domestic and international markets. Without suitable support measures, the risk of losing investment potential and the withdrawal of current investors is very real.

Besides adjusting land rentals, improving the business environment is also one of the suggested solutions to help enterprises overcome the current difficult period. Measures such as administrative procedure reform, reducing informal costs, and creating favorable conditions for businesses to access capital are seen as necessary to maintain production and business continuity. These solutions, if implemented in sync with reasonable adjustments to land rental costs, will help build a stable and attractive business environment, thereby laying the foundation for economic recovery and sustainable growth.

In the current context, Ho Chi Minh City needs to comprehensively consider its land policies to ensure both fiscal revenue and support for business maintenance and development. A reasonable land rental policy will not only help maintain the operational activities of existing businesses but also foster the development and expansion of new enterprises. This is of particular significance in maintaining growth momentum and ensuring the prosperity of the city, while also contributing to the sustainable economic development of the entire country.