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Wang Yajie, reporter of Economic Observer The first round of large-scale revitalization of central enterprises' existing land assets in history is about to begin.

This is the first time that major state-owned enterprises have so solemnly put this matter on the agenda. It is also the first time that the State-owned Assets Supervision and Administration Commission of the State Council (hereinafter referred to as "SASAC") has conducted a census of the land assets of all state-owned enterprises and put forward unified requirements.

A person in charge of state-owned assets revealed that relevant central enterprises are gradually launching pilot projects to revitalize existing land, conducting surveys based on the actual conditions of the enterprises, and reporting relevant data on existing land assets to the State-owned Assets Supervision and Administration Commission.

The Economic Observer learned that the relevant departments of the SASAC and China Chengtong Holdings Group Co., Ltd. (hereinafter referred to as "China Chengtong") have jointly conducted a special project to investigate the scale of the stock land assets of central enterprises, and based on the information and analysis results obtained, they have formed the first land resource database within the SASAC system. So far, the database has not been made public.

The SASAC has also launched a pilot program to revitalize the existing land assets of relevant central enterprises, with each enterprise having its own policy and implementing trials first.

In recent years, land resources have become increasingly scarce. The revitalization and utilization of stock land is one of the important contents of improving the market-oriented allocation of factors and accelerating the construction of a unified national market. As an important part of the state-owned economy, central enterprises are the major owners of stock land. If the stock land assets of central enterprises can be revitalized, more economic value will be created, and effective investment will be added, which is of great significance to promoting economic development.

However, the Economic Observer learned from a number of central enterprises that due to the scattered management agencies of their existing land, diverse usage natures, and numerous rights and interests disputes, there are also many conflicts of interest, and the revitalization cycle can easily take several years. Not only do they lack money and professional teams, but they also lack policy support.

The above-mentioned state-owned enterprise personnel believe that one of the most easily overlooked but most likely to cause internal controversy in the disposal and revitalization of existing land assets is that it involves multiple stakeholders and complex historical issues.

In addition to the SASAC, this work requires the participation of more departments and levels, more capital and more skills to succeed.

For many years, major state-owned enterprises have been frightened by the above-mentioned difficulties and have not had enough motivation to advance this matter.

In July this year, China Chengtong, as a master in state-owned capital operation, was approved by the State-owned Assets Supervision and Administration Commission of the State Council and jointly initiated the establishment of a special fund for the revitalization of state-owned enterprise land assets (hereinafter referred to as the "special fund") with China Orient Asset Management Co., Ltd. (hereinafter referred to as "Orient Asset"), with a total scale of 30 billion yuan.

Several relevant persons in charge of central enterprises' asset management companies told the Economic Observer that the fund is expected to significantly improve the efficiency of revitalization and tackle the "hard bone" of disposing of existing land assets.

This is the first attempt at state-owned assets to resolve "trapped" land assets on a large scale through market-oriented and professional means.

Chengtong is here

As a pilot state-owned capital operation company under the State-owned Assets Supervision and Administration Commission, Chengtong has extensive experience in the market-oriented and professional operation of non-core businesses and non-performing assets of central enterprises.

The total scale of the above-mentioned special fund is 30 billion yuan, with Orient Asset Management contributing 70% and China Chengtong contributing 30%, and the duration is 10+2 years. The fund will invest through direct investment in projects and the establishment of sub-funds, and the operation path is the cooperation paradigm of "government policy + state-owned enterprises resources + funds".

The special fund was approved by the State-owned Assets Supervision and Administration Commission of the State Council and jointly initiated by China Chengtong and Orient Asset Management. China Chengtong's wholly-owned subsidiary Chengtong Tongying Fund Management Co., Ltd., which is responsible for the special reform task, serves as the fund manager of the fund and is responsible for the investment and operation management of the fund throughout its life cycle. China Orient Special Opportunities Investment Division will participate in the future operation and management of the fund.

A person close to the special fund said that as the main investor, Orient Asset Management will participate in the investment decisions of some projects. The fund's investment form is equity investment, and the target of revitalization is land and ancillary buildings. The revitalization business formats are industrial parks, guaranteed rental housing, talent apartments, "normal and emergency dual-use" public infrastructure, and strategic emerging industry land.

The fund has three business models: one is direct project investment, that is, the fund directly invests in land asset revitalization projects; the second is sub-fund cooperation, the land revitalization fund can jointly initiate the establishment of special sub-funds with relevant central enterprises or local entities to provide special services to the central enterprises and localities; the third is customized plans, according to the company's qualifications, asset status, revitalization needs, etc., customized land asset revitalization plans and operation models can be designed.

A person from a central state-owned infrastructure enterprise said that the project cycle for revitalizing stock land assets can be as short as two to three years or as long as seven to eight years, and it is difficult to see results in the short term. Due to the problems of the state-owned enterprise management system, the efficiency of market-based decision-making is low. In the process of revitalizing, the relevant state-owned enterprises have to seek opinions from various units and enterprises, negotiate with different investors, and there are many internal interest games.

The emergence of special funds is expected to improve the above situation. Chengtong made some overall planning before its "death".

The person close to the special fund said that in addition to providing money, the special fund also intends to provide more professional assistance to help enterprises plan revitalization plans and find the best revitalization path, including the adjustment of assets and resources across central enterprises, which will be taken into consideration by the special fund.

He said: "It is difficult to standardize. The revitalization of different land assets needs to be tailored to local conditions. This is a relatively personalized and very complicated matter."

The person close to the special fund said that unlike a "one-size-fits-all" approach of selling land assets, the special fund will first assess the resource party's demands for land during operation, and then assess the latest needs of other central enterprises. After a thorough investigation, it will formulate a land consolidation plan based on the characteristics of local land assets, regional location, local planning, and surrounding facilities.

The main contents of the sorting include that the special fund team must first help central enterprises to reconcile accounts, compare certificates and physical objects, conduct preliminary sorting of financial and physical objects, collect historical materials, and record the surplus of off-book land assets (a financial term, which refers to the phenomenon that the actual inventory is greater than the balance in the account book or there is an object but no account during the property inventory).

In addition, the special fund must communicate with multiple stakeholders to find out the demands of different stakeholders and allow the different stakeholders involved in the land assets to get what they need.

The people close to the special fund are full of confidence in the special fund. They believe that normal land consolidation, adjustment of plans and introduction of construction teams are general capabilities, and that the fund's ability to afford money is not the most important thing. Strong planning capabilities and the ability to coordinate social resources are what central enterprises most urgently need in this round of large-scale revitalization of existing land assets. This is also a unique capability possessed by the special fund. Before this, no central enterprise had been able to do these.

At present, the special fund has signed cooperation agreements with some central enterprises.

However, the person also said that since the fund has just been established, many paths are still in the exploration stage. It is still unknown whether the fund size will be further expanded in the future, or how many asset revitalization projects can be successfully implemented.

path

Before Chengtong took action, some central enterprises had made successive attempts.

In a broad sense, stock land refers to urban and rural construction land that has been occupied or used. In a narrow sense, stock land refers to existing urban and rural construction land that is idle and unused, or has low utilization efficiency and low adequacy, but has potential for development and utilization.

The above-mentioned state-owned enterprise personnel gave an example that the existing land includes construction land for which the land use rights were obtained through bidding, auction, etc., construction land for which the land use rights were obtained through allocation, idle land for which the land use rights were obtained but not used, construction land for which the land ownership is unclear due to historical reasons, and rural collective land and construction land, etc.

A person from a central energy enterprise said that the main path of revitalization that his company had previously explored was to transform idle and unused land assets (a piece of industrial land), then communicate with the local government and participate in the local urban planning changes, first transform part of this industrial land into some shops, and then carry out joint development.

Another central enterprise in the manufacturing industry tried out a renovation project for old residential quarters, renovating dilapidated houses, and jointly with another real estate company under the group conducted a feasibility study on the revitalization project. In addition to meeting the requirements of the returning households, it also built some new commercial projects to recover part of the investment costs through these commercial projects.

However, the project has been planned for more than two years, but due to tight funding, it has not made rapid progress. The person in charge of the central enterprise in the manufacturing industry estimated that the initial investment in this revitalization project would require at least 3 billion yuan.

The above-mentioned state-owned enterprise person said that from the perspective of path, paid ways to revitalize existing land, including the transfer, leasing, and sale of construction land with land use rights and ownership, have the ultimate goal of optimizing asset allocation, clarifying land property rights, quantifying the value of land assets, and prompting existing land assets to enter the corresponding market for trading at different prices, realize the flow and reorganization of land property rights, and achieve the optimal allocation of production factors and land resources.

The above-mentioned person close to the special fund believes that government repurchase is also a good alternative. His idea has been reflected in a central enterprise's stock land asset revitalization project. A central infrastructure enterprise is negotiating with the local government on the repurchase of stock land (allocated land). If the repurchase is completed, the local government will initially plan to transform it into a central park.

However, even though some central enterprises have sporadically explored the above-mentioned revitalization paths, due to reasons such as project cycles of several years and heavy financial pressure, the revitalization of central enterprises' existing land assets has not been able to form a scale.

The above-mentioned person close to the special fund reminded that the next step is to judge the project from three dimensions: market feasibility, economic feasibility, and operational feasibility. The value of the land, the economic market of the city, and the real estate market must be carefully studied and economically calculated. On this basis, we will discuss the specific cooperation model with the local government, further promote the transformation of the land, and participate in the adjustment of the government's new plan.

Gaming

Defective asset certificates are the sword of Damocles hanging over the heads of most state-owned enterprises and a historical legacy problem unique to state-owned enterprises.

The head of the central enterprise asset management company had long been eyeing a large piece of idle land and wanted to turn it into a logistics and warehousing site. A year later, the land was still "stuck" in the same place because there was a flaw in the ownership of the land.

The problem of defective certificates of ownership of this central enterprise is not an isolated case.

The Economic Observer learned that the ownership of land assets of many central enterprises is very complicated. In addition, the top-level accounting policies for land and houses have undergone multiple rounds of adjustments. Previously, land and houses were managed by different departments. Some enterprises restructured and listed their auxiliary businesses in accordance with policy requirements, and divested some land and houses. In addition, the subordinate subsidiaries cross-used them in the actual production and operation process, resulting in a large number of real estate separations, discrepancies between accounts and documents, and discrepancies between accounts and actuals.

The head of the asset management company of the above-mentioned central enterprise gave an example. Even if it is clear that the land asset belongs to Company A, Company B has a closer territorial relationship with the land. If it wants to communicate with the territorial relationship, the head of the asset management company has to go through many difficulties and negotiate with various local subsidiaries. The process is very difficult.

According to relevant regulatory requirements, real estate needs to be unified in corporate financial accounts, property certificates, and actual ownership and use to avoid the risk of being exploited. The person in charge regrets that when state-owned enterprises underwent multiple rounds of reforms, they were often merged and transferred, and the transfer procedures were not strict. The transfer documents did not clarify the assets, resulting in the current certificate change missing the best window period.

Not only is internal coordination difficult, local governments are also creating problems.

One of the ways to revitalize existing land assets is asset replacement. When some local governments make planning changes involving asset acquisition and demolition, the relevant central enterprises can negotiate replacement with the local governments through government expropriation.

When it comes to asset swaps, the focus of the game is that "no one has money."

A central enterprise encountered "price pressure" during negotiations with a local government in Hebei Province. The local government lowered the collection price to a level lower than the assessed price. In order to facilitate this revitalization, the central enterprise is conducting multiple rounds of negotiations, such as meeting other needs of the local government and using its own professional team to help build a hospital in the local area, using this as a bargaining chip to maximize profits.

During the negotiation process, the central enterprise also had to deal with local housing and construction departments. In the land acquisition and employee resettlement stages, the central enterprise helped local departments to collaborate, investing a large amount of time, manpower and financial resources.

Taking the renovation of a shantytown on a piece of local existing land as an example, in order to obtain the consent of more than 90% of the residents, the team of the central enterprise person could only communicate with the residents one by one.

The regulatory authorities have paid attention to the above issues. In 2023, the "Notice of the Ministry of Natural Resources and the State-owned Assets Supervision and Administration Commission of the State Council on Promoting State-owned Enterprises to Revitalize and Utilize Existing Land" (Natural Resources Development [2022] No. 205) specifically proposed the requirement of "submitting an application to the municipal or county natural resources authorities where the land is located to directly handle the registration procedures for the change of the name of the land user" for the change of the name of the land right holder involved in the corporate reform of state-owned enterprises.

However, for enterprises, if they use conventional channels to change the title deeds, government agencies will charge a transfer fee for the title deeds change. In addition, over the years, the land assets have already appreciated in value, and today's land value-added tax has risen. Some central enterprises are unwilling to pay so much taxes and fees, and would rather wait and see, rather than actively promote the revitalization of land assets.

Taking allocated land as an example, the relevant central enterprises need to pay additional land transfer fees when revitalizing the land, and the amount is not low.

The head of the central enterprise asset management company said: "To put it bluntly, at least I have to do the math and make sure that the land assets I revitalize can make money, not lose money."

After contacting several state-owned enterprises, the Economic Observer found that this is a common problem, and the key to the problem lies again in "money."

node

Even though it is difficult, the time has come when this matter must be pushed forward.

The above-mentioned state-owned assets personnel believe that in recent years, the economic situation has become increasingly severe, the contradiction between population and land and the competition for land assets have become increasingly obvious, and it is urgent to revitalize the existing land. This is of great significance for improving the level of infrastructure operation and management, broadening social investment channels, reasonably expanding effective investment, reducing government debt risks, and reducing corporate debt levels. It can also meet the strong demand of enterprises for land assets. It is also an important guarantee for the smooth operation of China's economy and the preservation and appreciation of state-owned assets.

This is also in line with the policy requirements at the national level. As early as three years ago, the State-owned Assets Supervision and Administration Commission of the State Council intended to promote this matter on a large scale, and relevant central enterprises have also started to survey and sort out their own existing land assets.

However, state-owned enterprises have their own particularities. They are huge in size and have complex levels, making them difficult to revitalize.

A person from a central enterprise said that when the company was doing well in the past few years, revitalizing existing land assets was not the first choice. In the past two years, the economic situation has been severe. The capital cost of the projects invested by enterprises is very high, but the economic benefits are declining year by year. At this time, if some assets can be revitalized, it will solve the urgent problem and increase the value of assets. Even if idle land is rented out, or old communities and shantytowns are renovated, and existing assets are updated into new assets, it can also broaden the channels for enterprises to increase income and realize asset preservation and appreciation.

Zhu Changming, partner of Sunshine Times Law Firm, believes that in recent years, some state-owned enterprises have been operating at high risk, with a large number of inefficient and ineffective land assets. On the one hand, enterprises are burdened with huge debts and face great financial pressure. Therefore, by revitalizing existing land assets, enterprises can recover funds and alleviate financial pressure. This is an important means for state-owned enterprises to prevent and resolve debt risks and optimize asset structure.

Based on this, the State-owned Assets Supervision and Administration Commission and Chengtong began to take action one after another.

The head of the above-mentioned central enterprise’s asset management company also paid attention to the special fund and tried to contact it.

However, cooperation with special funds is a two-way selection process. The head of the asset management company intends to first screen out relatively high-quality assets, and only discuss cooperation with special funds on the premise of ensuring reasonable investment returns. If there are too many problems with the assets and the revitalization cycle is too long, Chengtong Fund's subsequent capital investment will also be affected.

The above-mentioned person close to the special fund believes that the foundation brings some scale effects, but currently the overall demand from enterprises is insufficient and the overall investment motivation of society is also insufficient. It will take a period of time to form a real effect.

He also learned from exchanges with other central enterprises that some companies have not yet figured out where to use their existing land assets and have not yet clarified their own needs.

A person from a central energy enterprise believes that solving and accelerating the special fund problem is one aspect, but more importantly, policy guidance from the government is also needed. For example, issues such as taxes and fees and land transfer fees all require support from the policy level.

Zhu Changming believes that revitalizing land assets is not a temporary task to deal with idle assets, but a systematic and long-term project to re-integrate land resources and maximize the benefits of resource allocation. Therefore, state-owned enterprises need to design a revitalization path in the context of reform and development to revitalize existing land assets. State-owned enterprises should establish a stock asset management organization, a normalized management mechanism and a professional management team, including land assets, and incorporate asset revitalization into corporate development strategies and daily operations management.