1. Overview

Foreign investors buying land, leasing land in industrial parks and renting machinery factories in Vietnam is a remarkable trend in the country’s economic development. This can bring many benefits to both investors and to Vietnam’s economic development.

Buying land and renting land in industrial parks helps investors access convenient locations, near infrastructure and services, as well as utilities necessary for production and business activities. In addition, renting a machinery factory also saves initial investment costs and reduces risks in the management and maintenance of facilities.

Attracting foreign investors can also bring more opportunities for technology transfer and job creation for local workers. However, in order to attract and retain foreign investors, legal policies and business environment need to be improved to create favorable and safe conditions for business activities.

Foreign-invested enterprise means an enterprise whose foreign investor is a member or shareholder including the following enterprises:

• 100% foreign-invested enterprises.
• Joint venture enterprises, Vietnamese enterprises in which foreign investors buy shares, merge or acquire in accordance with the provisions of the law on investment.

This enterprise will not be able to lease land directly from individuals, instead, the State is the subject of the decision to lease land to this organization in the form of land lease, collecting annual land rent or collecting land rent once for the whole lease period in the following cases:

• Lease land for implementation of investment projects in agriculture, forestry, aquaculture, salt production.
• Leasing land for non-agricultural production and business.
• Leasing land for construction of public works for business purposes.
• Lease land for the implementation of housing investment projects for lease.
• Land use for construction of career works.

On the other hand, foreign-invested enterprises may only lease assets attached to leased land or subleased land to pay annual land rent of individuals if:

• The leased land has been granted a Certificate.
• The lease of assets attached to leased land satisfies the conditions of the law on real estate business.
• Foreign-invested enterprises must use assets on land for the purposes defined in the land leasing decision of a competent state agency or in the signed land lease or sublease contract.

2. Conditions for leasing land in industrial parks

Atbest, rent industrial parks for production purposes. Specifically, the land will be used to build factories or design warehouses. Factories and/or warehouses are used for production and business in accordance with the objectives registered by the Investor in the Investment Registration Certificate.

Secondly, investors need to ensure that they belong to one of the following three subjects:

• Investors are economic organizations, households and individuals who want to expand production scale to meet the needs of the market.
• Investors who are Vietnamese residing abroad are looking to rent a production site to have good products.
• Investors are foreign-invested enterprises that want to link with domestic partners. The purpose is to have an ideal production place, human resources at competitive costs.

3. Rights and obligations when leasing industrial park land

When leasing land for an industrial park, investors have the following rights and obligations:

a) In the case of land lease, pay land rent once for the whole lease period:

– General rights and obligations as stipulated in Articles 166[1] and 170[2] of the 2013 Land Law. Accordingly, investors will be granted certificates of land use rights, ownership of houses attached to land.

– Transfer of land use rights and assets under their ownership attached to land;

– Sub-leasing land use rights and assets under their ownership attached to land in cases where land lease is collected by the State for a lump sum land rent for the whole lease period;

– Donating land use rights to the State; donate land use rights to residential communities to build works serving the common interests of the community; donation to the benevolent house attached to the land in accordance with law;

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

– To contribute capital by using land use rights and their owned assets attached to land for production and business cooperation with organizations, individuals, overseas Vietnamese and foreign-invested enterprises in accordance with law.

b) In case of land lease paying annual land rent:

– General rights and obligations as stipulated in Articles 166 and 170 of the 2013 Land Law;

– To mortgage their owned assets attached to leased land at credit institutions licensed to operate in Vietnam;

– Selling his/her owned assets attached to leased land when meeting the conditions specified in Article 189 of the 2013 Land Law; the purchaser of the property shall continue to lease the land for the purpose for which it has been determined;

– Capital contribution with assets owned by them attached to leased land; recipients of capital contributions with assets shall continue to lease land by the State for defined purposes;

4. Procedures for leasing land in industrial parks

Step 1: Prepare your application

To lease industrial park land, investors need to prepare a complete set of documents as prescribed in Clause 2 Article 2 of Circular 09/2021/TT-BTNMT.

• Application for registration of changes in land and assets attached to land according to Form No. 09/DK
• Contract on the lease or sublease.
• Original Certificate issued

Step 2: Apply

The business owner sends it to the Department of Natural Resources and Environment for review and resolution.

Step 3: Application processing

After receiving the dossier, the Department of Natural Resources and Environment will inspect and review whether the dossier is complete and valid.

• Invalid and complete documents: The Department of Natural Resources and Environment will notify the applicant in writing to supplement or adjust the documents in time.
• The dossier is complete: forward to the Land Use Rights Registration Office to extract cadastral maps.

After that, the data will be transferred to the tax office to determine financial obligations. The enterprise’s dossier continues to be appraised by the Department of Natural Resources and Environment and then submitted to the People’s Committee of the province or city directly under it for decision.

Step 4: Pay taxes

Investors need to fulfill financial obligations before receiving results in the one-stop department. The maximum processing time limit is within 20 days from the receipt of a valid application.

Step 5: Return the result

After paying the tax, the enterprise comes to receive the results (including the land lease decision along with the land use right certificate) at the Department of Natural Resources and Environment.

Above is the content of KALF’s advice on procedures for foreign investors to lease land in industrial parks. 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.

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