Bid very high and then cancel deposit, create virtual price level to manipulate the market

On the afternoon of November 8, delegates discussed in groups the draft Law amending and supplementing a number of articles of the Law on Property Auction.

Speaking, National Assembly Delegate Ta Thi Yen - Deputy Head of the Delegation Affairs Committee, delegate of Dien Bien delegation expressed agreement with the necessity of promulgating the Law project amending and supplementing a number of articles of the Law on Property Auction.

To promote administrative reform, judicial reform, perfect mechanisms, policies and laws, prevent corruption and negativity in asset auction activities to institutionalize the Party's guidelines and policies and the State's laws, contributing to ensuring the unity, synchronization, feasibility and effectiveness of the legal system.

Commenting on some regulations on auction procedures in the draft Law, Ms. Yen said that some contents are not really suitable to the reality, especially for some special assets, or the mechanism to cancel auction results in some specific cases.

Regarding the order and procedures for auctions, according to delegates, the draft Law has amended and supplemented a number of regulations on the order and procedures for auctions of special assets including land use rights to implement investment projects, mineral exploitation rights, radio frequency use rights, etc.

However, Ms. Yen is concerned that the draft law does not clearly stipulate the auction of future assets, real estate projects such as apartments, houses... for which the buyer has made a deposit, or paid a part of the asset value according to the contract...

“Recently, in property auctions, there has been a phenomenon of manipulating starting prices, bidding very high and then canceling deposits to create a virtual price level for profit, creating a virtual land fever…”, the female delegate stated the current situation.

According to the delegate, the draft Law has amended and supplemented the provisions on cancellation of auction results in the direction of: Clearly defining the subjects and grounds for cancellation of auction results to ensure feasibility, compliance with the provisions of civil law, and legal consequences when canceling auction results to protect the interests of the State, the rights and legitimate interests of individuals and organizations, and clearly defining the responsibilities of those who commit violations leading to the cancellation of auction results.

Dialogue - Bidding very high and then canceling the deposit, creating a virtual price level to manipulate the market — National Assembly Delegate Ta Thi Yen.

However, in reality, when the behavior of the subjects in the course of the auctions has shown to be abnormal or unreasonable, there are no regulations on what to do, or to postpone or stop the auction to analyze and evaluate the situation?

Regarding the responsibilities of agencies and organizations in asset auction activities, Ms. Yen said that in order to strengthen the responsibilities of people with assets to be auctioned during the auction organization process, the draft Law amends and supplements a number of regulations on the rights and obligations of people with assets to be auctioned, responsibilities in managing, operating, and guiding the use of the National Asset Auction Portal, etc.

These are very new regulations, towards publicity, transparency and increased accountability of relevant agencies and individuals, so I strongly support them.

In practice, there have been a number of projects invested by the State or State-owned enterprises that have been operating at a loss in recent times, but have been slow to be handled due to difficulties in asset valuation and auction organization, for example, the Phuong Nam Pulp Mill Project in Long An province that has lasted for decades, causing waste of public finances.

“In my opinion, it is necessary to have more detailed regulations on the capacity of the apparatus, professional capacity, expertise and responsibility of the staff involved in handling and auctioning public assets and state-owned enterprise assets in similar cases to ensure that the auction is public and transparent, minimizing negative impacts on social life,” Ms. Yen commented.

In addition, delegates suggested that it is necessary to analyze and clarify existing problems and difficulties related to the inconsistency and lack of synchronization between legal regulations on land, investment, auction and tax management, finance, and corporate credit, especially regarding conditions for registration to participate in auctions, financial capacity of auction participants, and deadline for paying auction winnings.

“Because if we only amend and supplement the provisions of the Auction Law, it will not be enough to prevent market manipulation and speculation, especially in the real estate sector,” Ms. Yen said, adding that a more comprehensive solution is needed for policies on credit, land, enterprises, and asset auctions to resolve the above problems.

Proposal to expand training in trade, investment, and securities

Commenting on the draft law, National Assembly member Le Hoang Hai (Dong Nai delegation) agreed with the amendment and supplement to the Law on Asset Auction. Regarding auction training, the delegate said that the Law stipulates standards for majors to be trained in auction profession as law, economics , accounting, finance, banking, which limits the subjects allowed to participate in the auction profession. In reality, the same major is economics, but when granting degrees, universities write it as foreign economics, investment economics, commercial business, etc. Therefore, in addition to the prescribed majors, the delegate proposed to expand training in trade, investment, and securities .

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