1. 1. Get land use rights

Pursuant to Clause 1, Article 191 of the 2013 Land Law, in case of not being able to receive transfer or gift for the right of use, it is stipulated that organizations, households, individuals, residential communities, religious establishments, overseas Vietnamese, foreign-invested enterprises are not entitled to receive the transfer, receive gifts for land use rights in cases where the law does not allow the transfer or donation of land use rights. Therefore, according to the above regulations, foreign-invested enterprises will not automatically receive the transfer of land use rights for production and business or build the unit’s headquarters.

Foreign-invested economic organizations may receive land use rights in the following forms:

Firstly, receive the transfer of land use rights in industrial parks, industrial clusters and high-tech parks.

Second, receiving the transfer of investment capital is the value of land use rights according to the Government’s regulations;

Third, economic organizations and joint venture enterprises receive land use right transfer in the form of receiving capital contribution by land use rights.

Fourth, foreign-invested enterprises receiving land use rights through the State allocate land to implement investment projects to build houses for sale or possibly for sale combined with leasing.

Fifth, land leased by the State.

Sixth, receive land use rights under:

• The results of successful conciliation on land disputes shall be recognized by competent People’s Committees;
• Agreement in the mortgage agreement to settle the debt;
• Decisions of competent state agencies on settlement of land disputes, complaints and denunciations about land, judgments, court decisions, execution decisions of executed judgments of judgment enforcement agencies;
• Decision or award of Vietnamese Commercial Arbitration;
• Written recognition of land use right auction results in accordance with law
• Documents on the division and separation of land use rights in accordance with law for groups of land users who share common land use rights.

2. 2. Mortgage of land use rights

According to the provisions of law, foreign-invested economic organizations that are leased land by the State collect one-time land rent for the whole lease period and foreign-invested economic organizations allocated land by the State with land use levy to implement investment projects in Vietnam have the right to mortgage land use rights, their owned assets attached to land at credit institutions licensed to operate in Vietnam.

3. 3. Forms of payment of land rent

Foreign-invested economic organizations may choose specific forms of land rent payment as follows:

• Foreign-invested economic organizations that are being leased land by the State collect annual land rent, but in case the land leased by the State collects land rent once for the whole lease period, they may choose to switch to land lease to pay land rent once for the remaining land lease period and must redetermine the land price for calculation lease land at the time of issuance of a decision allowing conversion to land lease in the form of a lump sum land rent payment for the whole lease period.
• Foreign-invested economic organizations that are being leased land by the State collect land rent once for the whole lease period and are selected to convert to land lease to collect annual land rent.

The paid land rent shall be deducted from the annual land rent payable according to the Government’s regulations.

4. 4. General rights and obligations of land users

Regarding the general rights of land users: To be granted certificates of land use rights, ownership of houses and other assets attached to land, enjoy the fruits of labor, investment results on land, enjoy benefits provided by the State’s works for protection, improve agricultural land, be guided and assisted by the State in improving and replenishing agricultural land, be protected by the State when others infringe upon their legitimate land rights and interests, and be compensated when the State recovers land in accordance with this Law, complain, denounce and initiate lawsuits for violations of their lawful land use rights and other acts that violate the law on land.

Regarding the general obligations of land users:

• Use land for the right purposes, within the boundaries of land parcels, in accordance with regulations on the use of depth in the ground and overhead height, protect public works in the ground and comply with other relevant provisions of law.
• Make land registration declarations; complete procedures when converting, transferring, leasing, subleasing, inheriting or donating land use rights; mortgage or contribute capital by land use rights in accordance with law.
• Fulfill financial obligations in accordance with the provisions of law.
• Take measures to protect the soil.
• Comply with regulations on environmental protection, do not harm the legitimate interests of relevant land users.
• Follow the provisions of the law on finding objects in the ground.
• Reassign land when the State makes a decision on land acquisition, when the land use term expires without being extended by a competent state agency.

5. 5. Rights and obligations for land allocation by the Vietnamese State with land use levy collection for project implementation

Foreign-invested enterprises allocated land with land use levy collected by the Vietnamese State for project implementation shall have the following rights and obligations:

– Exercise general rights and obligations in accordance with Vietnamese land law.

– Transfer of land use rights and assets under their ownership attached to land during the land use term.

– Leasing or sub-leasing land use rights and assets under their ownership attached to land during the land use term.

– To mortgage with land use rights and assets under their ownership attached to land at credit institutions licensed to operate in Vietnam during the land use term.

– Capital contribution by land use rights and assets under their ownership attached to land for production and business cooperation during the land use term.

6. 6. The role of land use rights of foreign investors

Land use rights of foreign investors play an important role in the investment and business process, specifically:

– Facilities for business activities: Land use rights allow foreign investors to build facilities such as factories, offices, manufacturing plants, or commercial centers. This is the basis for them to carry out business activities and produce goods or provide services.

– Integration into the supply chain: Land use rights allow foreign investors to participate in the global supply chain. They can use the land to produce finished products or portions of products that are exported or serve local markets.

– Generate sources of income and profits: Land use rights usually relate to the ability to generate income and profits from the business and rental of real estate. This can contribute to the economic growth of the country in which it is investing.

Job creation: Foreign investors’ business activities related to land use rights often create employment opportunities for local communities, contribute to economic development and reduce unemployment.

Promotion of regional development: Foreign investment projects are often accompanied by the development of the surrounding area, including infrastructure and other ancillary projects, contributing to the development and improvement of the quality of life of local communities.

– Create opportunities for international cooperation: Foreign investors often cooperate with local and international partners in the land use process, creating opportunities for cooperation and experience exchange.

Tax contributions and public funding: Foreign investors’ business activities often pay land tax and other fees, providing funding for the public budget and development projects of the country investing.

Tofulfill these roles, foreign investors need to comply with Vietnamese land laws and regulations and be socially and environmentally responsible.

Above is the content of KALF’s advice on foreign investors receiving land use rights in Vietnam and related issues. All of our above advice opinions are based on applicable legal provisions. If you have any questions or requests about legal issues, please contact us for timely answers.