by Prof. Dr. Dang Hung Vo , Special to Viet Nam News

Compensation for land clearance is always a hot topic. — Photo Saigontimesdaily

(Biz Hub) — About two decades ago, Viet Nam set out an ambitious development vision to transform itself into an industrialised country by 2020.

Since the industrial development took place, it has triggered the conversion of agricultural land to non-agricultural purposes at overwhelming speed.

Along the way, the land conversion has introduced many perplexing problems, particularly those related to compensating farmers affected by involuntary resettlements.

The last time the Land Law was revised in 2003, one of its main objectives was to provide an institutional framework to effectively address such things. Yet 10 years on, Viet Nam has not established any working scheme of compensation for land losers.

The State is being faced with two major challenges: huge piles of land-related complaints and rampant corruption risks in land management. Most of these cases arise out of the land acquisition process.

Our approach to compensation so far has been quite simple. Investors provide land losers with a single payment using the market price as a benchmark and in some few cases, additional supports to rebuild lives and livelihoods.

Even if the compensation rate is set right, which is not the case by the way, this is far from enough because it does very little to guarantee long-term benefits for those whose land is taken away.

In fact, apart from a lump sum they receive in the beginning, many affected communities benefit virtually nothing from the project or worse, have to deal with unintended and unwanted social and environmental ramifications.

A case in point is the Hoa Binh hydro-electricity power plant which has been a major supply for the industrialisation process since it came into operation in 1995. A few years after its completion, there was a report that while the electricity from the plant lit up large parts of the nation, a village nearby forced to actually give some land to build the plant was still in the dark because no one had thought to include them in their plans.

In the last few years, the media has contained many accounts of how mining projects contaminate rivers and play havoc with the livelihoods of local residents. This raises questions about who development projects are meant to benefit.

The prevailing view in Viet Nam is that a project will benefit investors directly and the public indirectly. However, benefits for communities who lose their land are often overlooked or deliberately ignored. This is not fair because the projects actually create losses for many people.

Benefits-sharing mechanism may ensure an equitable sharing of the benefits from development by investors and locals. When the mechanism was first developed by the World Bank in 1980, its studies mainly focused on hydro-power projects. But the mechanism can be applied to other projects with large-scale impacts on residential communities, such as mining projects, economic parks or large irrigation systems.

The principle behind the benefits-sharing mechanism is that the land losers should continue to have a stake in what comes up on what was their land. In other words, project developers now have to share the economic benefits generated by the project with local communities on a long-term basis. The benefit-sharing mechanism could be either monetary or non-monetary.

Take a hydro-power project as example. The developer could share the benefits by supplying preferential electricity rates to communities, redistributing a part of the revenues or even sharing ownership with local authorities as well as financing the funds to foster economic development of the area.

They could also work with the local community on livelihood restoration and enhancement as well as improving their social infrastructure such as housing, schools, and health-care. The list just goes on.

As sound as this mechanism might appear, it would never work out in the absence of robust settlement policies. This means if Viet Nam wants to adopt it, it would have to revise thoroughly its legislative system, investment policies, taxation systems and spatial planning among others.

The problem here is Viet Nam has paid surprisingly little attention to this benefits-sharing mechanism even though it has worked in other countries, many of which have the same level of development as Viet Nam.

If one closely follows the on-going discussion on amending the Land Law, which only happens once in a decade, it is pretty easy to tell that compensation and resettlement policies dominate the agenda. However, most people only discuss how to improve the current compensation approach, such as changing terms and limiting the scope of applications.

But things may change because the current approach, no matter how it is refined even under the new law, will never work because obviously it does not touch on the root cause. At the end of the day, people who lose land must be able to live a life at least as economically and socially rich as they did before. That is the core principle of sustainable development, the path Viet Nam has chosen to embark on. — VNS

*Professor Dang Hung Vo of the Viet Nam National University Ha Noi is an independent consultant on land policies. He served as a Deputy Minister of Natural Resources and Environment of Viet Nam between 2002 and 2007.