Decree No. 48/2007/ND-CP on principles and methods for determining prices of various types of forests

DECREE

On the principles and methods for determining the prices of various types of forests

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THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Forest Protection and Development Law dated December 3, 2004;

Based on the Price Ordinance dated April 26, 2002;

At the request of the Minister of Agriculture and Rural Development,

DECREE:

PART I

GENERAL PROVISIONS

Article 1. Scope of application

This Decree stipulates the principles and methods for determining the price of the right to use protective forests, special-use forests, and natural production forests (hereinafter referred to collectively as the price of the right to use forests); the price of ownership of planted production forests (hereinafter referred to as the price of ownership of planted forests).

Article 2. Scope of application

The price of the right to use forests, the price of ownership of planted forests shall be issued by the People's Committee of provinces and centrally-administered cities (hereinafter referred to as the provincial People's Committee) in accordance with this Decree as the basis for:

1. Calculating the forest usage fee when the State allocates forests with a forest usage fee, the value of the right to use forests, the value of the ownership of planted forests when the State allocates forests without a forest usage fee as prescribed in Article 24 of the Forest Protection and Development Law 2004.

2. Calculating the rental fee when the State leases forests without auctioning the right to use forests or the ownership of planted forests as prescribed in Article 25 of the Forest Protection and Development Law 2004.

3. Calculating compensation when the State recovers forests as prescribed in Article 26 of the Forest Protection and Development Law 2004.

4. Calculating the contribution value by the right to use forests, the ownership of planted forests of the State at enterprises as prescribed in Clause 1 and Clause 3 of Article 35 of the Forest Protection and Development Law 2004.

5. Calculating compensation for individuals or entities violating laws on forest protection and development causing damage to the State.

6. Calculating various taxes, fees, and charges as prescribed by law.

Article 3. Applicability

This Decree applies to state agencies, units, organizations, households, individuals within the country, overseas Vietnamese, foreign organizations, and individuals related to the determination and application of prices of various types of forests in Vietnam.

Article 4. Definitions

In this Decree, the following terms are understood as follows:

1. The price of the right to use forests is the value that the forest owner can benefit from the forest during the period allocated or leased, calculated in monetary terms per hectare (ha) of protective forests, special-use forests, and natural production forests according to the Forest Management and Utilization Regulations issued by the State.

2. The price of ownership of planted forests is the value that the forest owner can benefit from the forest during the period allocated or leased, calculated in monetary terms per hectare (ha) of planted production forests according to the Forest Management and Utilization Regulations issued by the State.

3. The actual transfer price of ownership of planted forests, the right to use natural production forests on the market under normal conditions is the amount of money calculated per hectare of planted production forests, natural production forests formed from actual transaction results with widespread characteristics on the market between the seller and buyer, not affected by speculative factors, changes in planning, forced transfers, kinship relations.

4. The actual rental price of the right to use forests on the market under normal conditions is the amount of money calculated per hectare of protective forests, special-use forests, and natural production forests formed from actual transaction results with widespread characteristics on the market between the lessor and lessee, not affected by speculative factors, changes in planning, forced rentals, kinship relations.

Pure income from forests is the amount of money that the forest owner earns from timber harvesting activities; landscape business, ecotourism, scientific research (if applicable) after deducting investment costs to create forests, taxes, and other reasonable expenses.

Forest usage fee, rental fee is the amount of money that the forest owner must pay to use the forest for timber harvesting purposes; landscape business, ecotourism, scientific research (if applicable) according to the Forest Management and Utilization Regulations issued by the State.

Compensation paid to the forest owner when the State recovers forests is the amount of money that the State must pay to the forest owner corresponding to the income the forest owner could have earned from the forest during the remaining allocation or lease period from timber harvesting; landscape business, ecotourism, scientific research (if applicable) according to the Forest Management and Utilization Regulations issued by the State.

Compensation for damage caused by individuals violating laws resulting in forest damage is the amount of money that the violator must compensate the State, including the value of timber and the environmental value of damaged forests.

a) Timber value is the value of all wood and non-timber forest products on the damaged forest area.

b) Environmental value is the value of the annual environmental services provided by the forest and is calculated as the ratio between the net income of the annual environmental value and the one-year term deposit interest rate of VND at commercial banks with average interest rates at the valuation time or calculated based on the timber value of the forest multiplied by a factor k ranging from 2 to 5 (depending on the type of forest).

Article 5. Principles and bases for determining the prices of various types of forests

1. Ensuring transparency, objectivity, and scientific accuracy.

2. Close to the actual transfer price of the right to use forests, ownership of planted forests, and the actual rental price of the right to use forests on the market under normal conditions; when there are significant fluctuations in the actual market price of the right to use forests and ownership of planted forests, adjustments should be made accordingly.

3. Based on the location of the forest area, the condition of the forest; the volume and quality of forest products at the time of valuation.

4. Based on the forest utilization plan; management and utilization systems for each type of forest; economic and technical standards and norms issued by the State.

5. Forest areas of the same type, function, equivalent in location, forest condition, volume, and quality of forest products shall have the same price level.

Chapter II

METHODS FOR DETERMINING THE PRICES OF VARIOUS TYPES OF FORESTS

Section 1

INCOME APPROACH METHOD

Article 6. Income approach method

1. The income approach is a method to determine the price level of a specific forest area based on the net income derived from the forest, converted to the valuation date with the interest rate of one-year term savings deposits in VND at commercial banks with the average interest rate in the region at the valuation date.

2. The income approach is applied to determine the price of the right to use protective forests, special-use forests, and natural production forests; the price of ownership of planted production forests.

Article 7. Conditions for applying the income approach

Apply the income approach when there is sufficient information to determine the net income generated for the forest owner from the forest area to be valued.

Article 8. Procedure for valuing using the income approach

1. Survey and collect information about the forest area to be valued, including the type of forest according to the purpose of forest use, the condition of the forest, the volume of timber, the quality of forest products, and regulations on forest management and use.

2. Determine sources of revenue and costs related to forest product exploitation activities; landscape business, eco-tourism, scientific research (if applicable) on the forest area to be valued.

3. Calculate the net income for the remaining years of the production cycle (for planted production forests); net income over the period of forest use (for protective forests, special-use forests, and natural production forests) or annual average net income (if applicable) for natural forests.

4. Determine the deposit interest rate as stipulated in Clause 1, Article 6 of this Decree.

5. Determine the price of the right to use protective forests, special-use forests, and natural production forests; the price of ownership of planted production forests.

Section 2

COST METHOD

Article 9. Cost Approach

1. The cost approach is a method to determine the price level of a specific forest area based on reasonable costs invested in creating the forest and the interest rate of one-year term savings deposits in VND at commercial banks with the highest interest rate in the region at the valuation date.

2. The cost approach is applied to determine the price of ownership of planted production forests under conditions where the type of forest to be valued has not had transactions on the market.

Article 10. Conditions for applying the cost approach

Apply the cost approach when there is sufficient information to determine the reasonable costs invested in creating the forest for the forest area to be valued from the investment date to the valuation date.

Article 11. Procedure for valuing using the cost approach

1. Survey and collect information about the current state of the forest, infrastructure facilities attached to the purpose of forest protection and development at the valuation date, and regulations on forest management and use.

2. Collect data on reasonable costs invested in creating the forest from the investment date to the valuation date.

3. Determine the deposit interest rate as stipulated in Clause 1, Article 9 of this Decree.

4. Determine the corresponding interest amounts equivalent to bank deposit interest rates for the investment costs during the period from the investment date to the valuation date.

5. Determine the price of ownership of planted production forests.

Section 3

COMPARISON METHOD

Article 12. Comparative Approach

1. The comparative approach is a method to determine the price level of a specific forest area through analyzing actual prices of transferred ownership rights of planted forests, transfers, leases of forest use rights on the market, or transaction prices regarding ownership rights of planted forests, forest use rights (between the State and forest owners) of similar forest areas of the same type, with similar forest conditions, timber volumes; quality of forest products to compare with the forest area to be valued.

2. The comparative approach is applied to determine the price of the right to use protective forests, special-use forests, and natural production forests; the price of ownership of planted production forests.

Article 13. Conditions for applying the comparison method

1. The comparison method shall be applied when there is sufficient information about the area of similar forests that have been transferred, leased on the market or transactions (between the State and forest owners) that can be compared with the area of forest to be appraised.

2. In cases where the factors of the area of forest used for comparison and the area of forest to be appraised are not uniform, adjustment coefficients may be used.

Article 14. Procedure for appraisal using the comparison method

1. Survey and collect information about the area of forest to be appraised including the type of forest according to its purpose, location, condition, volume, quality of forest products, and infrastructure facilities attached to the purpose of protecting and developing the forest at the time of appraisal and regulations on management and use of the forest.

2. Determine information about the area of forest that has already been priced for comparison including the location, condition, volume, quality of forest products, and infrastructure facilities attached to the purpose of protecting and developing the forest at the time of transfer, lease, or transaction on the market.

3. Analyze and compare to select similar and different criteria regarding price between the area of forest for comparison and the area of forest to determine the price.

4. Adjust the different factors regarding the price of forest use rights, the price of forest ownership rights between the area of forest for comparison and the area of forest to be appraised.

5. Determine the price of protective forest use rights, special-purpose forest use rights, and natural production forest ownership rights, and the price of planted production forest ownership rights.

Section 4

SELECTION OF APPRAISAL METHODS AND ADJUSTMENT OF FOREST PRICES

AND ADJUSTING THE PRICES OF VARIOUS TYPES OF FORESTS

Article 15. Selection of methods to determine the prices of various types of forests

Authorities and organizations with the function of appraising and consulting on prices shall base their selection of methods to determine the prices of various types of forests on the principles and methods prescribed in this Decree and the specific conditions of the locality.

1. The selection of appraisal methods must be based on the specific type of forest price to be determined and ensure the interests of the forest owners and forestry workers.

2. In necessary cases, a combination of the methods for determining the prices of various types of forests prescribed in this Decree may be used for appraisal or to check, compare, and verify when deciding on specific prices.

Article 16. Adjustment of prices of various types of forests

The People's Committee of the province shall decide to adjust the prices of various types of forests in the following cases:

1. When there is a change in the planning or plan for forest use.

2. When the actual market price of forest use rights or planted forest ownership rights increases or decreases by more than 20% continuously for six months or longer compared to the current regulated price.

Chapter III

IMPLEMENTATION

Article 17. Responsibilities of Provincial People's Committees

1. Entrust specialized agencies or hire organizations with the function of appraising and consulting on prices to determine the prices of various types of forests in accordance with this Decree.

2. Organize the review of the prices of various types of forests, submit them to the People's Council at the same level for approval and public announcement in the locality.

3. Inspect, handle, and resolve issues related to the appraisal of various types of forests within the local authority's jurisdiction.

4. Monitor changes in transfer and lease prices on the market or transaction prices (between the State and forest owners) regarding forest use rights and planted forest ownership rights on the market; regularly organize statistics on the prices of various types of forests.

5. Specify the coefficient "k" as the basis for determining compensation for persons who violate laws on forest protection and development causing damage to the State in accordance with Clause 8, Article 4 of this Decree.

6. The funds for implementing the determination of the prices of various types of forests shall be guaranteed by the state budget.

Article 18. Responsibilities of Ministries and Sectors

1. The Ministry of Agriculture and Rural Development shall take the lead and coordinate with the Ministry of Finance to guide the implementation of this Decree.

2. The Ministry of Agriculture and Rural Development shall coordinate with relevant ministries and sectors to inspect, supervise, and resolve issues arising during the implementation of this Decree.

Article 19. Implementation Provisions

1. This Decree shall take effect fifteen days from the date of publication in the Official Gazette.

2. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial and centrally governed city People's Committees are responsible for implementing this Decree./.