PLF Tutorials

LEGAL TUTORIALS FOR DOING BUSINESS IN VIETNAM

Investment with land use in Vietnam


Investors investing in Vietnam to establish an economic organization with wholly foreign-owned capital shall be entitled to land use in Vietnam to perform investment project.

Land use Forms

  • Land lease from the State with annual payment or one lump-sum payment for the entire lease term.
  • Land allocated by the State for performing projects of residential houses for sale or for sale in combination with for lease.
  • Land lease and land sub-lease from economic organizations and overseas Vietnamese.

Article 149; Article 150; Article 151, Article 8; Clause 1, Article 52; Clause 3 Article 55; Item dd, Clause 1, Article 56; Clause 3, Article 153 2013 Law on Land
 

Conditions on land allocation and land lease to perform investment projects

Having finance capacity to perform project. Specifically:

  • Having owner’s equity from 20% or more to a project below 20 hectares and from 15% or more with respect to a project over 20 hectares over the total investment level;
  • And having the ability to raise capital from credit organizations, foreign bank branches and other individuals and organizations.

Investment deposit based on partly progressive level. Specifically:

  • Deposit level of 3% with the capital portion up to ~13 million US dollars;
  • Deposit level of 2% with the capital portion over ~13 million US dollars to 43.5 million US dollars;
  • Deposit level of 1% with the capital portion over ~43.5 million US dollars.

Example: For a project with investment registration capital of 65 million US dollars, the deposit amount will be calculated as follows:
 

Capital portion to ~13 million US dollars 13 million US dollars 3%
Capital portion over ~13 million US dollars to ~43.5 million US dollars 30.4 million US dollars 2%
Capital portion over ~43.5 million US dollars 21.7 million US dollars 1%
Deposit Level = (13 x 3%) + (30.4 x 2%) + (21.7 x 1%) = 1.215 million US dollars

 

Please note that there are cases in which the deposit is not required:

  • An investor wins a land use right auction in the form of land allocation with land use fee or land lease with one lump-sum rental for the entire lease term to perform investment project.
  • An investor wins a tender for investment project performance with land use.
  • The land is allocated by or leased from the State to the investor to perform investment project on the basis of accepting the transfer of an investment project of which the deposit has been made or the capital contribution has been completed or raised on schedule.
  • The land is allocated by or leased from the State to the investor to perform an investment project on the basis of accepting the transfer of land use right and properties attached to land from other land user.

There is no violation of any provision of the regulations on land with respect to other investment projects.

Article 58, 2013 Law on Land; Article 13, Article 14 Decree 43/2014/ND-CP, Article 27 Decree 118/2015/ND-CP

 

Land use term & land lease term

Not over 50 years for ordinary cases.

Not over 70 years if falling into one of the following special cases:

  • A project having large invested capital but slow capital recovery
  • An investment project in the area having difficult socio-economic conditions or extremely difficult socio-economic conditions.

With respect to a business project of residential houses for sale, for sale in combination with for lease or for lease-purchase, the term for land allocation shall be determined based on the project investment term.

Purchaser of residential houses attached to land use right shall enjoy stable long-term use of land.

Upon expiry of this term, if the investor has the demand to continue to perform the project, the project performance term will be considered and extended further.

Article 126 2013 Law on Land
 

Common rights of land user       

  • To be issued a Certificate of Land Use Right Ownership of Residential House and Other Properties Attached To Land;
  • To be entitled to labor performance and investment result on land;
  • To be entitled to profits created by State works for serving the protection and improvement of agricultural land;
  • To be instructed and assisted by the State in improving and fostering agricultural land;
  • To be protected by the State when others infringe their lawful rights and benefits on land;
  • To be compensated upon land retrieval by the State in accordance with the Law on Land;
  • To complain, denounce and initiate an action when the land use right is violated

Article 166 2013 Law on Land
 

Rights and obligations upon land lease with annual rental:

  • To have common rights and obligations of land users (as above);  
  • To mortgage properties attached to the lease land owned by land users at credit institutions permitted to be operated in Vietnam;
  • To sell properties attached to the leased land owned by the land user upon having sufficient conditions as stipulated;
  • To contribute capital using properties attached to leased land owned by land user; the entity accepting the capital contribution by properties shall continue renting the land from the State for the determined purposes;
  • In case being licensed to invest in building and trading infrastructure for land in industrial zone, industrial cluster, export processing zone, high-tech zone, economic zone, investors are entitled to sublease the land use right with annual rental with respect to the land with completed built infrastructure.

Article 175 2013 Law on Land
 

Rights and obligations of land users with land being allocated with land use fee and leased land with one lump-sum rental for the entire lease term

  • To have common rights and obligations of land users (as above);  
  • To transfer land use right of the leased land and owned properties attached to land;
  • To lease land use right and properties attached to land with respect to the land allocated by the State with land use fee;
  • To sub-lease land use right and properties attached to land with respect the land leased by the State with one lump-sum rental for the entire lease term;
  • To donate land use right to the State, residential community for constructing works which serve common benefits of the community; to donate gratitude houses attached to land;
  • To mortgage land use right and properties attached to land at credit institutions permitted to be operated in Vietnam;
  • To contribute capital using land use right, properties attached to land.

Article 174, 2013 Law on Land
 

Land retrieval

After 12 months from the date on which the land is allocated or leased by the State; or after 24 months delayed in comparison with the progress in the investment project, investors shall put the land in use.

In case it is unable to put the land in use, investors shall be allowed a further extension of 24 months and shall pay an amount respective to the delayed period of progress to the State.

When the extended term expires and investors still have not yet put the land in use, the land will be retrieved by the State without compensation on the land and properties attached to land except for force majeure events.

Article 64, 2013 Law on Land

 

Questions