Khanh Hoa Province facing illegal land handovers

The central province of Khanh Hoa lately has discovered several illegitimate handovers of state-managed land in build-transfer (BT) projects. Many prime locations in the province have been turned to private under those shady transfers.

Starcity Project on Tran Phu Street of Nha Trang City (Photo: SGGP)

Conclusions of the Government Inspectorate at the end of 2020 revealed that there have been 35 violated land projects in Khanh Hoa Province, many of which are located in prime locations in Nha Trang City. Most law-breaking activities are because the local authorities have not organized transparent bidding processes for the land use right of government-managed land pieces.

The most infamous case is the 3,000m2 site at 25-26 Nguyen Dinh Chieu Street in Nha Trang City. It is handed over by the province to Khanh Viet Corp. (Khatoco – a state-owned company) to construct a 19-floor building for residential and commercial purposes.

10 years after the approval of the project, in 2014, Khanh Hoa Province People’s Committee formally issued a decision to allow Khatoco to begin the project. Yet no work was commenced, and Khatoco only handed in VND34 billion (approx. US$1.5 million) as the land use fee. In February 2016, Khanh Hoa Province People’s Committee made another decision to let Khatoco Real Estate Investment and Trading Co. Ltd. (member of Khatoco) handle the project.

According to Khanh Hoa Province Tax Department, Khatoco should have paid over VND38 billion ($1.7 million). However, citing Circular 76/2014 by the Ministry of Finance for land lots with the value of under VND20 billion ($872,000), functional agencies in the province did not hold any bidding or price evaluation, even though the real value of this lot reached VND40-60 million per square meter ($1,744-2,616).

At the end of 2016, Khatoco Real Estate Investment and Trading Co. Ltd. contributed VND12 billion ($523,336) to Vietnam Cat Tiger Co. Ltd. to form Cat Tiger Khareal Co. Ltd. with the charter capital of VND48 billion ($2.1 million) to take charge of this construction project.

As the lot was valued at VND45 billion ($1.96 million), Vietnam Cat Tiger Co. Ltd. paid its partner VND33 billion ($1.44 million) and formally took over the whole project.

In August 2017, Cat Tiger Khareal Co. Ltd. changed its business registration permit and increased the charter capital to VND180 billion ($7.85 million) and bought all stocks of Khatoco Real Estate Investment and Trading Co. Ltd., becoming the one-member Co. Ltd. instead of the two-member one and fully privately managed the construction project of the 3,000m2 site.

One other prominent case is Starcity Project, sited at the address of 72-74 Tran Phu Street in Nha Trang City, with a surface area of 2,453m². The location used to belong to the Guesthouse of Khanh Hoa Provincial Party Committee. The main investor of this project is StarCity Nha Trang Hotel, which won the project without any bidding from Nha Trang Ship Chandler Company (an equitized state-owned enterprise).

Another case is the project of Muong Thanh Nha Trang luxury apartment hotel complex, located at the address of 60 Tran Phu Street in Nha Trang City. The 4,509m² site was managed and used by Khanh Hoa Tourism Co., which then cooperated with Muong Thanh Group to construct a 46-floor building. However, since the contribution of Khanh Hoa Tourism Co. was too minor, the site is now under the control of Muong Thanh Group.

A similar case is the 2,112m2 lot located at 12 Le Thanh Ton Street of Nha Trang City. It was handed over by the province to Vietnam Cat Tiger Co. Ltd. to construct an office building without any clear bidding. Gaining the investment certificate in 2013, the investor did not perform any action and transferred the project right to An Phu BDS Development and Investment JSC. in 2017. Despite the tardiness and illegal transfer, the project received no warning from the People’s Committee of Khanh Hoa Province.

Recently, there has been the case of the construction project for Hoa Da Event and Business Services Center under the responsibility of Hoa Da Business – Services – Tourism Co. Ltd. The project was greenlighted in 2014 on the ground of an old 936m2 cinema at the address of 35 Yet Kieu Street in Nha Trang City.

The Government Inspectorate announced that the sale of state assets according to their current value and under the form of competitive bidding by Khanh Hoa Province People’s Committee is a violation of the law on state property management.

What is more, the selection of investors without bidding does not observe the 2005 and 2015 Law on Investment.

Therefore, the Government Inspectorate proposed that the Prime Minister asked Khanh Hoa Province People’s Committee immediately halt these projects, revoke the issued investment certificates, and withdraw the transferred land.