B.E. Assessment

The Impact of Land Market Proccesses on the Poor, Viet Nam, M4P 2004

    Economist Hernando de Soto has theorized that informal land tenure is a key factor trapping people within poverty. The poor are often unable to reap maximum economic benefit from land assets that remain hidden within the informal sector-- essentially "dead capital." Informality is caused by the excessive complexity and cost of formal procedures and the deliberate exclusion of poor people from these systems by elites. He suggests that the granting of formal land title, and the inclusion of poor people's assets within a land administration system, will have transforming effects on poor people's livelihoods and on the prosperity of society as a whole.

    This research examined these ideas in the context of the Vietnamese rural land market. To what extent is informal land tenure common in the Vietnamese countryside ? What are the reasons for this informality ? What effects does exclusion from formal land processes have on the poor ?

    Both the full report and a 5 page brief are available on the right hand side.

    Methods for info gathering
    The methodology focused on documenting formal and informal land market processes and assessing the quality of government land records.

    Summary of results
    The research showed that significant progress has been made in granting of formal land use titles to households. Land use right certificates (LURCs) for agricultural land have been granted to more than 70% of households in 10 of the 12 districts surveyed. As land values increase, households increasingly seek to register land transactions formally.

    Informality, however, still thrives in a number of areas. The causes of continued informal land tenure and transactions can be traced to land users themselves and to the formal system of land administration. Various examples of the detrimental impact of informal land transactions--particularly on the poor--were highlighted in the study.

    At least in rural Viet Nam, evidence suggests that the transforming effects of land title provision should not be exaggerated. The study highlighted how formal land title systems can themselves have detrimental impacts on the poor, if implemented inaccurately and inefficiently, particularly through the inaccurate measurement of plot sizes. Despite the lack of any formal registration, thriving land rental markets have developed inrural areas. In some districts, formal land title was found to be not an essential condition for mortgaging land with banks. The cost and inefficiencies of legal processes for foreclosure on collateral also raise questions on the decisive role
    of legal land title in the mortgage market.

    Despite these reservations, an efficient and accurate formal land administration system can bring significant benefits to poor people through improved security of tenure, reduced boundary and ownership disputes, and opportunities to access finance and higher land values.

    Associated Activities and Documents
    B.E. Assessment
    »Private Enterprise Formality and the Role of Local Government, Viet Nam, M4P, 2004