Nguyen Thanh Tai, vice chairman of the People’s Committee, signed the decision, which will be effective from December 11.

It will amend a decision made earlier in March by the People’s Committee on the amount of compensation due residents when the State reclaims land in their area.

Prior to the decision, farmers who owned agricultural land-use rights near urban residential areas complained that they had been compensated at the same low rate as owners of farmland in rural areas.

In addition, unofficial black market rates for urban farmland were higher than the fixed rate set by state law. As a result, farmers balked at accepting the official rate and resisted moving.

According to the amended decision, owners of agricultural land-, garden-, and pond-use rights near residential areas in HCM City will continue to receive the same level of compensation.

But to sweeten the purse and satisfy residents who must move, city officials said farmers would also receive additional compensation equivalent to 40 per cent of the rate fixed for residential land near their small farms.

This residential land has a much higher value than land in rural areas.

Residential land rates are published annually and set by the People’s Committee.

The decision also states that in special compensation cases, the district People’s Committee will report to the city’s Compensation Council, which will make recommendations to the city People’s Committee.

The City People’s Committee said it would raise agricultural land prices by 20 per cent in 2009 compared to 2008, and compensation rates would be adjusted accordingly.

Speaking at a meeting on the use of agricultural land until 2020 and towards 2025, vice chairman of the HCM City People’s Committee Nguyen Trung Tin said in early 2009 all districts would have to develop a long-term land-use plan.

Such planning would encourage investors to pour money into large-scale, long-term projects and help farmers outline production goals, he said.

Prime agricultural land and areas suitable for eco-tourism should be protected, he added.