Land Tenure Reform: Perspectives from the Agricultural Sector in Vietnam since 1945

Land Tenure Reform: Perspectives from the Agricultural Sector in Vietnam since 1945

Published: 2023.11.09
Accepted: 2023.11.09
31
Institute of Policy and Strategy for Agriculture and Rural Development,Ministry of Agriculture and Rural Development of Vietnam
Researcher
Division of Policy and Strategy Study, The Institute of Policy and Strategy for Agricultural and Rural Development
Institute of Policy and Strategy for Agriculture and Rural development of Vietnam

ABSTRACT

This article provides an overview of land policies related to the agriculture sector in Vietnam from 1945 to the present. The first land policy in Vietnam was enacted in 1953, named "cai cach ruong dat." Over 35 years of Vietnam’s economic reform, the country’s land law has been amended four times in 1987, 1993, 2003, and 2013 to meet agricultural development demand. Changes in land policies have significantly affected the agricultural sector. Due to land management development, Vietnam changed from a rice importer to one of the world's largest rice exporters. However, agricultural development still encounters difficulties in the exploitation of agricultural land. After innovations in land policies, land fragmentation still exists until now. Enterprises and talented farmers face many constraints when they are approaching agricultural land to produce agricultural commodities on large farms. Individuals and households keep their agricultural land as an insured property instead of exploiting it for production, leading to abandoned wasted land. Therefore, this study suggests that the government should enact inheritance tax and farmland tax to reduce land fragmentation and adjust agricultural land to efficient land users.

Keyword: land tenure, land policy, land reform, land law, agriculture and rural development

INTRODUCTION

In 2019, over 65% of people in Vietnam were rural residents (Vietnam Molisa, 2019)[1], mainly working in the agricultural sector. The land is considered as an essential resource for agricultural production. Therefore, changes in land tenure could have a significant impact on agricultural development.

Vietnam introduced four Land Laws in 1987, 1993, 2003, and 2013. A draft of Land Law 2023 is being revised by the Vietnam people, government, and parliament before publishing. In this article, the land reform process in Vietnam is divided into five periods. The first period from 1945 to 1985 was "land to tiller" campaign. Second, the "doi moi" period from 1986 to 1990. Third, the land market starts to operate under a market mechanism from 1991 to 2002. The next period is from 2003 to 2012, and land is allocated to farmers for use in long term and stably. Finally, land use rights have been improved to serve large-scale agricultural production from 2013 to date.

Since independence in 1945, the innovations in land policies have created a solid impetus to promote agricultural and rural economies and farmers' livelihoods and outstanding achievements. Land laws were often issued when rice output decreased. After the implementation of the land law, this output quantity increased, meaning land law positively impacted rice production in Vietnam. Especially two years after the land law in 1997 was introduced, Vietnam rice was exported for the first time. Before 1986, the country still imported rice.  

In the agricultural sector, land policies are often amended to support Vietnam’s agriculture sector. In 1987, the agricultural growth proportion reached a negative value; however, it increased dramatically and continuously in the next three years since land law was introduced in 1987. The phenomenon also exists with land law in other periods.

However, agricultural land policies in Vietnam perform both the tasks of agricultural development and social security, and then these policies often prioritize solving current problems and immediate future visions. It caused long-term problems, which even do not resolve now. First, agricultural land is divided increasingly into small plots rather than land consolidation to large-scale commodity production. Second, an increase in the transferring of agricultural land to non-agricultural land serves for industrialization and modernization strategies. Third, enterprises and small farmers face many challenges because of policy constraints and the scenarios of reduction and fragmentation of agricultural land.

Therefore, an overview of land policies in Vietnam will explain the disadvantages and advantages of agricultural land policies in the country by pointing out primarily changes in land policies. Then, the impacts of land policies on agricultural production during these periods are examined. This article will provide a holistic picture of land tenure in Vietnam and lessons learned for amending the land law in 2023.  

LAND REFORM AND AGRICULTURAL DEVELOPMENT IN VIET NAM SINCE 1945

There are some different changes in each land law about types of agricultural land. Therefore, in this article, the definition of agricultural land is identified by current land law (2013); agricultural land includes annual cropland, perennial crop land, forestry land, aquaculture land, and other types of agricultural land.

 “Land to the tiller” and land reform law from 1945 to 1985

During this period, Vietnam took the first step in its national recovery and development. From 1945 – 1975, Vietnam was still in protection and unification wars. Almost all policies were inherited from the lessons of socialist countries such as the Soviet Union and China. Land policies tend to be trial and fixed immediately if it is necessary. In the first step, Vietnam allocated agricultural land for each household to fulfil the revolutionary purposes. Then, households were encouraged to contribute their land to cooperatives under a process of collectivization. However, the poor management in agricultural cooperatives reduced production motivation, which led to the policies of farm contracts arising to enhance farmer responsibility in their land. 

Before the Revolution of August 1945, land tenure was operated by a feudal mechanism. Landlords owned most of the land, farmers had no or very little agricultural land, and only 3% of the population owned 52.1% of the total land (Nga, 2009). Production relations in the agricultural sector were mainly feudal relations of production with an underdeveloped traditional production process. The lord's feudal ownership and the peasant's ownership of the individual instruments of production, with the hereditary usufruct of his tenure. In this period, the campaign was accomplished: "land to the tiller", which was transferred from a slogan to a reality. Generally, land reform named "cai cach ruong dat (or partial reform)" started after the revolution of August 1945. This campaign aimed to redistribute land owned by French and pro-French Vietnamese people.

In 1953, Vietnam officially introduced the first law of land reform or the law of radical reform. The law had two purposes. First, the Vietnam government confiscated land from large property owners (landlords and rich farmers) who had a large of agricultural land under the system of French colonists before 1945. Second, the confiscated land was allocated to Vietnamese peasants who had no land or a tiny field. This law confirmed the regime of peasants' land ownership and aimed to liberate productive power in the countryside, boost agricultural production and support the development of industry and commerce in Vietnam.

As can be seen from Table 2, the land of landlords and rich farmers were completely transferred. The land reform campaign from 1953 to 1956 allocated 334,100 hectares of fields to the middle, poor and poorest peasants, and farmers in the North. Due to land redistribution, peasants had become full owners of their land, with the right to mortgage, sell, and donate their allocated land. The production motivation of farmers was enhanced. In 1957, food production reached 4.5 million tons, which exceeded much more significantly than the production before 1945[3].

The land allocation principle enhances farmers' productivity and their trust in the Vietnam government. However, this principle also shows some disadvantages. First is the error in identifying what land and subjects were confiscated and redistributed. Local authorities followed the votes from the peasants to operate land confiscation and redistribution, and then good rich farmers were convicted wrongly. According to statistical data in 421 communes of the provinces, there were 4,777 households wrongly attributed and compensated for their properties (over 603 hectares). Second, large agricultural land areas were divided into small-size areas to ensure everyone had the same good field and bad fields, near fields and far fields. That is the main reason why current agricultural land is scattered and fragmented.

In 1958, Vietnam moved to build a centrally planned economy with collective policies in rural areas. According to the summary charter of agricultural cooperatives in 1959, cooperative members must contribute land, buffaloes, cows, and main agricultural tools (such as plough, harrow, waterwheel, etc.) to the cooperative, and then they were counted as cooperative share. Vietnam’s government encouraged rural households to join cooperatives in their communes. From 1959 to 1960, 85% of total households participated in cooperatives, and 68.1% of the total agricultural land area was contributed (Pham, 2001).

But during this period, there also arose some disadvantages of the cooperative regime, therefore, new economic models were examined in some provinces. For example, the "khoan ho" policy was introduced by Vinh Phuc Provincial Party Committee in 1966, which regulated working contracts for groups, cooperative members, and household every season to ensure rational use of the labor force and productivity increase. In 1980, following the lesson from Vinh Phuc province, Hai Phong province also applied "khoan ho" policy. The reform campaigns persuaded Viet Nam government to change land policies. In 1981, The Party Central Committee issued Directive 100 CT/TW on "Improving contract work and expanding product contracting to labor groups in agricultural cooperatives," marking a breakthrough in economic innovation thinking which leading to changes in land policies in the next stages.

Land policies from 1986 to 2001

In this period, due to failures of collectivization and poor agricultural performance, agricultural land policies had a great change in nature. Agricultural land was returned from cooperatives to farmers. Farmers had five rights including transferring land use right (LUR), leasing LUR, swapping LUR, inheriting LUR and using LUR as a mortage  since agricultural land was allocated to them by local authorities. Farmers have long-term and stable land use rights, but the government has the right to recover agricultural land for economic development and national security purposes. Land users have to pay taxes to use agricultural land.

In 1987, according to achievements from "working contract for household" (khoan ho) campaigns in some provinces, land law was introduced by the National Assembly of the Socialist Republic of Vietnam confirmed that the country’s land is owned by all Vietnamese people and the Vietnam government only has a management function. According to this law, agricultural land was allocated to households for prolonged use, but land users did not have the right to sell and lease their land.

Cooperatives and state farms allocated agricultural land to those households living in the areas they were managing. However, land areas from cooperatives allocated to a person should not exceed 10% of the average agricultural and forestry land area per individual in each commune. Land areas from state farms allocated to a household should not exceed 200 square meters in Northern Delta and Central Plains from Thanh Hoa to Thuan Hai[4], 500 square meters in Midlands, Southeast and Mekong Delta, 1,000 square meters in the Mountains and Central Highlands.

This land law had encouraged the household economy and opened the pathway to the development of the private economy in Vietnam. However, the disadvantage of the 1987 land law was the value of land use rights. At that time, land prices were not clear, and it was difficult to calculate land tax. Therefore, land law 1993 was introduced in 1994. This law distinguished land use rights and land ownership right. Land ownership belongs to the entire Vietnamese people, and the State acts as the representative owner and unified management. Households had land use rights, and they were granted land use rights certificates (red book). Land Law 1993 had encouraged farmers' investment in their land, increased accessibility to credit for farmers through their agricultural land and helped agricultural output to increase rapidly. The gross output of the cultivation sector increased from US$5.35 million in 1993 to US$9.25 million in 2003 (at a constant 1994 price and exchange rate in 1996). However, Vietnam’s agricultural land, especially annual cropland, was still fragmented because of the land allocation principle. Local authorities had to ensure that every household had to have the same land areas, agricultural land was divided into different plots, and local authorities had to allocate plots in separate locations to each household living in each commune. In 1996, the average agricultural land area was 0.31 hectares per household (Sergiy 2018). Land fragmentation was the highest constraint for applying high technologies and machinery for agricultural production.

In this period, the agricultural land market had operated slightly. However, plots were acquired mainly by inheritance between family members and government allocation rather than through the land market. Figure 3 illustrates a survey conducted in 2014 about the sources of plots that households were using. Only 1.3% of household plots were bought after governments allowed the right to sell agricultural land in 1994.

The agricultural land market was weak because of some barriers. According to Article 75 of land law 1993, a household could only sell their agricultural land when this household moves to another commune and with non-agricultural jobs and is unable to work. Furthermore, individuals and households who want to buy agricultural land must be individuals and households who had no land or had land under the agricultural land quota (article 9 of Decree 17/1999/ND-CP in 1999). In the same article, households who want to buy paddy land must be households who are working directly in the stages of agricultural production.

In 1998, land law 1998 was amended from land law 1993, which confirmed the right of capital contribution with the value of land use rights for households. The land law was continued to be revised in 2001 and added with the right of land users to receive compensation when the State implements land acquisition.

Land policies from 2003 to 2013

Land Law 2003 which was improved from the previous land laws about rights for agricultural land users had been published in 2004. It also added a new right for agricultural land users, which was the right to donate land to other users. Furthermore, Governments stipulated the quota on the acquisition of agricultural land use rights.

Importantly, implemented solutions to resolve land fragmentation in Vietnam were also indicated in this law by encouraging the farm economy. Furthermore, the land allocation quotas were not only regulated for a household but also for individuals. This law also allowed economic organizations (including private companies) to participate in agricultural land markets.  

In this period, the number of plots per household was reduced, and the area of plots increased, which can be seen from Figure 4. Sergiy (2018) quoted that the average agricultural land area per household in Vietnam increased from 0.31 hectares in 2004 to 0.57 hectares in 2014.

Because of promoting farm economy, the average area per commercial farm[5] increased significantly from 4.5 hectares of agricultural land in 2006 to 7.73 hectares in 2011 (Agrocensus 2006, 2011). Land use efficiency of big farm production in crop and aquaculture were higher than that of a household production in the same types of agricultural land. 

Agricultural land users were provided with comprehensive legal bases to participate in the official agricultural land market; however, this market was still inefficient. In 2014, only 3.1% of the plots was bought officially after 2003, and this number even reduced by 1.2% compared to this proportion from 1994 – 2003 period (4.3%). Especially, a significant growth in other sources of plots suggested that they tend to transfer agricultural land in an unofficial way.

Hoang Xuan Phuong (2017) indicated that households are likely to make a hand-to-hand transaction without the confirmation of land management organizations. The main reason was the high agricultural land tax (10% of transaction value). In addition, people see their agricultural land as insurance. They can return to farming if they fail in non-agricultural jobs.

Land policies from 2014 to present

During this period, some problems of land law in 1993 and 2003 were resolved by the land law 2013. This law extends the time quota to 50 years for agricultural land for households and 70 years for economic organizations (including private companies). The quota of land allocation for households and individuals is expanded. Land law 2013 directly encourages land consolidation by shifting agricultural land use rights. Following Article 190, individuals and households do not have to pay income tax and registration fees when they swap their land with each other in the same commune, ward or township to facilitate agricultural production.

Large -scale farms of households and individuals are also encouraged by land rent exemption. And when they rent agriculture land from governments, if their land use right is expired, they are exempted from auction in land rent procedures. In 2020, the average agricultural land per big farm increased from 5.25 hectares in 2016 to 5.96 hectares in 2020 (Agrocensus, 2020).

However, farm-size is still small.  Households using under 0.2 hectares contributed 38.00% and 36.00% in 2011 and 2016, respectively, this rate increased to 42.67% in 2020 (GSO, 2011, 2016, and 2020).

Between 2016 and 2020, the average area of a plot of households increased (from 1,843.1 to 2,026.3 square meter), but the number of plots per household also increased from 2.5 plots to 2.8 plots per household (GSO, 2020). Total agricultural land of households accounted for a large proportion of total agricultural land areas of the country (over 60% of total agricultural land areas in 2014 and 2020) but the farm size of individual household was very small. The main reason for land fragmentation is the inheritance of land from parents. Land inheritance is considered as a historical tradition in Vietnam.

In the case of enterprises, they posed challenges when approaching agricultural land areas. Figure 6 shows that the percentage of agricultural land areas used by private enterprises decreased from 11.12% in 2014 to 10.25% in 2020. The enterprises which have foreign direct investment (FDI) are also in the same boat. In addition, enterprises can only rent agricultural land from local authorities for production development.

Although land policies have been revised a number of times to support agriculture production with significant achievements, there are still some constraints needed to be addressed. Recently, several new policies including land policies are being prepared to implement in Vietnam with the aim of creating more favorable legal framework for effective agriculture development in the future.

CONCLUSION

Over the past 35 years of innovation of Vietnam, land policies have played an important role in agricultural development. Vietnam’s government has made many efforts to improve agricultural performance through innovations in land policies since 1953. Farmers were allocated prolonged and stable agricultural land, which made Vietnam transfer from a rice importer to a rice exporter and even became one of the largest rice exporters in the world. Comprehensive rights-related agricultural land attracts investment resources in agriculture, especially in the private sector. Especially an encouragement of land consolidation toward large-scale production is opening opportunities for everyone and enterprises to invest in the agricultural sector. Vietnam’s government also focuses more on the agricultural land market to help this market to catch the development of the real estate market.

Vietnam government is also revising the land law in 2023. There are many new ideas proposed in the draft land law 2023 and it is expected such changes will bring better conditions for higher productivity of land and support the development of commercial agriculture in Vietnam.

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[2] Christine Pelzer White, 1970, land reform in North Viet Nam, The university of Michigan

[4] Thuan Hai is an old province in the South-Central region of Viet Nam. Thuan Hai province was established in February 1976, merging from the three provinces of Ninh Thuan, Binh Thuan, and Binh Tuy.

[5] The criteria for determination of farm economy must be over land allocation limit (3.1 hectares for the Southeast part provinces and Mekong Delta; 2.1 hectares for the remaining Provinces), Article 5, Circular No 27/2011/TT-BNNPTNT in 13 April 2011.

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