Minimum fees set for industrial land

By Li Fangchao (China Daily)
Updated: 2006-12-28 07:03

The fees to transfer the rights for land used for industrial purposes will have minimums in a scheme announced yesterday by the Ministry of Land and Resources (MLR).

The minimum fee scheme will take effect from Monday. The move came after the State Council released a statement to strengthen the macro control of land management in August.

The move was designed to curb investments involving too much land for a rights transfer fee that was too low. As a result, industries were acquiring rights to more land than they could immediately use.

MLR Vice-Minister Wang Shiyuan said local governments were driving down the transfer fees, or even promising a "zero fee" to attract investment.

"Low land rights transfer fees led to excessive expansion, fuelling a large amount of unnecessary, low-level construction," he said.

"The vicious competition has ruined a fair market environment, resulting in a regional imbalance."

Wang said that the practice also brought a huge loss of State assets and damaged the interests of farmers, who had been using the land.

"The low land rights fees are often at the cost of higher compensation fees that farmers should have received," he said.

Although the State Council ordered local governments to set up their own minimum use transfer fees in 2004, many did not carry out the order or set a very low standard to lure investment, Wang said.

According to the new scheme, the country's land is divided into 15 classes that were divided according to socio-economic status, the land condition, and the average of the fees of the land around it, said Liao Yonglin, director of the ministry's land utilization department.

For example, the minimum rate for first-class land, such as the Huangpu District in Shanghai, is 840 yuan (US$107) per square metre.

Beijing's Chaoyang District is labelled second class at 720 yuan (US$92) per square metre.

And land rated 15th class, such as land in the western provinces of Gansu and Yunnan is only 60 yuan (US$7.67) per square metre.

Of course, each government is allowed to set a higher standard according to its own situation.

"Through the rights transfer fee policy, we hope to promote a better industrial arrangement," Liao said.

"For example, in some coastal areas where land is scarce, some industries would not be suitable to these areas."

Liao said that some governments in the region already began to pick projects that benefit long-term development.

"Facing increased transfer fees, enterprises will take their own choices, and governments will also readjust their investment introduction policies," he said.

He said a gradual trend would result in some industries moving from the eastern part of the country to the central and western parts because the land prices are so low.

Wang said that rather than leading to price increases, the new scheme will help stabilize housing prices.

"The standard, which aims to curb the development of too much land for industrial use, will promote environmentally friendlier use of the land," he said.

Wang also said the country was devising a plan to allot 30 per cent of the income from land-use fees to help farmers who had lost their land.

(China Daily 12/28/2006 page2)

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