Hanoi (VNA) – Vietnam’s ongoing administrative reforms, marked by the rollout of a two-tier local administration model and the mergence of administrative units, is ushering in significant changes to local governance methods, expected to remove procedural bottlenecks while enhancing transparency and expanding the real estate sector’s appeal to investors, according to insiders.

Assessing the impact of the new model, Director at Savills Vietnam’s Advisory Services Do Thi Thu Giang said that the deeper decentralisation of authority to local administrations will help reduce processing time for construction permits and project approvals, thereby reducing opportunity costs and increasing investment efficiency.

One of the business community’s major expectations is that the overhaul will be accompanied with significant improvements in transparency and information accessibility, she said, adding consolidating approval authority at the provincial level is seen as an effective way to eliminate overlapping in approval and inconsistent legal interpretations – one of the biggest barriers for foreign investors.

Digital transformation initiatives such as building a national land database system and implementing electronic licencing will contribute to enhanced transparency in land management. Giang said this provides the foundation for the real estate market to better align with international standards.

Together with the two-tier local administration model, the mergence of localities also impacts land valuation and land finance policies. Under the 2024 Land Law, following the emergence, localities must develop new land prices appropriate to each area’s characteristics.

Giang analysed that the law clearly stipulates principles for land price differentiation by specific location, potentially down to individual plots if sufficient data exists while preventing the application of uniform pricing that lacks accuracy.

Experts believed that granting higher autonomy to localities in investment attraction policies is expected to promote healthy competition between regions. However, this requires investors, particularly international investors, thoroughly assess the locality's governance capacity, development orientation, and regional compatibility with business strategies.

According to Giang, alongside tax and land use incentives, site clearance ability, infrastructure, and dialogues between local administrations and enterprises will play an increasingly important role in investment decisions.

Assoc. Prof. Dr. Tran Dinh Thien, member of the Prime Minister’s Policy Advisory Council, observed the bold and pioneering approaches by several localities like Ninh Thuan and Quang Binh, stating administrative reforms are effective only if they are accompanied with breakthrough policies and strong strategic approaches.

While the potential is clear, experts also noted that the actual impact of the reforms hinges on the enforcement of policies from the central to local levels. Therefore, continued legal reforms in such areas as land, housing, and investment, along with better capacity of officials in operating the new model, are the key to the realty market's development.

Senior Director at Hanoi CBRE’s Hanoi branch Nguyen Hoai An pointed out that one of the major challenges is legal complications, including determining land prices, calculating land use fees, and land clearance. The formation of a land use right trading floor will help establish land prices closer to market rates, limiting speculation, price manipulation, and realty bubble.

Meanwhile, Associate Director of CBRE Vietnam's Housing Project Marketing Vo Huynh Tuan Kiet warned not all land parcels become "di🎃amond" after merging, stating land prices truly increase with sound planning, infrastructure, and development plans./.