The respected Comrade
"A favourable climate and good conditions for investment should be created in our economic development zones in order to revitalize their operation, and wide-scale tourism should be encouraged."
One of the important issues in enabling the operation of economic development zones to provide favorable investment environment and conditions is to have a clear understanding of land rents and land royalties, since foreign investment enterprises entering the economic development zones are willing to obtain the land suitable for their economic activities. Once they are guaranteed to establish their enterprises, the land rents and royalties are to be paid.
Both land rents and land royalties have common features in the sense of costs or charges incurred during the purchase and use of land in the economic development zones, but there are some distinct differences.
Land rent is the value that the land rental authority receives in return for transferring the right to use the land to those who want to rent the land.
Historically, land rents have been designed to be paid according to the agreed amounts or in the proportion to income by the tenant to the lessor each year; this is a view derived from the view of rental as a zone.
However, with the longer term of land lease, we can't tell the difference between the nature of land lease and the transfer of ownership; especially in those countries where foreign investors are not given the ownership of land, land use rights are commercialized.
With land-use rights being commercialized, it has become a trend to pay full land rents on a due date, so that the lessor may earn a lot of income at a go, and the lessee may have the same comfort as having full ownership of the land by paying the lease, although they have to pay a lot of money at one time.
Land rental is defined by the negotiation between the lessor and the lessee on the basis of the reference rent set by the government in case of negotiation, and in case of bidding and auction, at the price raised by the bidder. And in case of lease of the developed land, the land rental is the sum of the land lease and the cost of land development.
Land royalties are the rates paid to the state by the tenants for the use of state-owned land. This fee is the economic space in which the state exercises its ownership over the land used by foreign investment enterprises registered in the state; land royalties are paid annually by the users of the leased land on the basis of the corresponding land area.
The tenants of the leased land include those who leased the land from the relevant land management authority, those who took over the right to use the land through purchase and sale, and those who re-leased the land.
For the project to be invested in the economic development area, land use charges can be reduced or released up to 10 years depending on the size, content and economic effectiveness of the investment.
The lease relationship in the economic development area is, in essence, a relationship in which only the right to use the land is commercialized and lent to the investor for a certain period of time and the ownership of the land is invariably held by the state.
The economic expression of land lease relationship is found by the Land Management Authority in the receipt of land lease, while the economic expression of state ownership occurs in the receipt of land royalty from the state-landlord each year.
Land royalties are paid by the tenant of the leased land; the tenants of the leased land include the tenants of the land from the Land Management Authority, the holders of the lease of the land through sale, the re-tenant of the land, the joint ventures with the land as the equity share.
Land rents are strictly applicable only to the area contracted by the Land Management Authority and the lessee, but land royalties are fixed by the state or the appropriate authority authorized by the state, so that they do not exceed 20% of the variance even if they fluctuate.
Correct understanding of land leases and land royalties will contribute to providing a favorable investment environment and conditions for the economic development zones and to activating their operations.
