rural-urban dynamics_report.pdf - Khazar University

136 URBANIZATION AND THE MDGS GLOBAL MONITORING REPORT 2013
government officials assessed the market
value and replacement costs of assets for land
acquisition purposes. In 1972, the government
introduced the Basic Land Prices system
to improve assessments. In this new system,
land and buildings had to be assessed by certified
private appraisers rather than government
officials. Two appraisers had to provide
estimated values for the property, and the
final value was calculated as the average of
the two values. If the two appraisals differed
by more than 10 percent, a third appraiser
was selected and the average recalculated.
Since 2003, a third appraiser may be recommended
by affected individuals as well
(World Bank 2013a ).
Developing countries often lack the systems
to record and manage information on
land transactions. The data may not reflect
the true price of land because of black market
transactions to save on duties, for example,
or because of heavy public subsidies on housing
and land use. Land registries are often
archaic and lack the dynamic functions that
allow them to be searched or updated quickly.
These deficiencies translate into a dearth
of data on real estate prices, preventing the
critical analysis necessary for appraising land
values. That, in turn, has heavy implications
for local revenue generation, such as property
tax collection and land sales or leases, that is
based on real estate values.
Take India, where such information systems
are in their infancy and the government
often acquires land for industrial and
infrastructure development. Farmers and
other landowners are compensated with payments
benchmarked to the stamp duties, a
land transaction tax. But because the marginal
rate for stamp duties has been as high
as 12 percent historically, land and property
values have long been underreported (World
Bank 2013b). 1 Now, as India’s policy makers
amend the rules for changes in land use, the
lack of independent and reliable land valuations
is likely to result in public discontent
and conflicts over land.
In Vietnam, too, official land prices fail to
reflect demand. The country has two prices
for land transactions—a market price, and
FIGURE 3.2 Vietnam’s dual land price system
creates problems for the assembly of large plots
of land needed for industry
Percent
100
90
80
70
60
50
40
30
20
10
0
6
38
56
Source: World Bank 2011.
3
9
88
Hanoi Danang Bien Hoa
62 72
Large-scale development
(>$100 million and 200 hectares)
Mid-scale development
($10 million–$100 million and 20–200
hectares)
Small-scale development
(