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Directions and Solutions for Perfecting the Law on Land Use Rights of Foreign-Invested Economic Organizations in Vietnam


- Extending land use period creates peace of mind for investment and has enough time for long-term business;

- Receive support and assistance from the State in determining land prices (establishing valuation agencies, registration agencies...);

- Linking business form conversion with land use form;

- Simplify administrative procedures, strengthen the capacity of real estate registration and management agencies...

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At the same time, the land law system also needs to be amended in accordance with the progress and roadmap of joining international organizations and international treaties that our country has signed or participated in or is aiming to participate in. Such as resolving the issue of mortgages and land use rights transfers of US and Vietnamese enterprises committed to in the Vietnam - US Trade Agreement. Or the issue of land use for foreign-invested enterprises in Vietnam associated with the regulations of the World Trade Organization (WTO) ...

3.1.2. Bases

Directions and Solutions for Perfecting the Law on Land Use Rights of Foreign-Invested Economic Organizations in Vietnam

3.1.2.1. Current situation

Currently, the law only stipulates that businesses with infrastructure in industrial parks have the right to sublease land with built infrastructure. There are some businesses that are not in the above category because they have not fully calculated the market potential, objective fluctuations... so after going into operation, they have not yet mobilized full capacity, leading to excess factories, warehouses, industrial premises, accompanying infrastructure works, reducing production and business efficiency because the product cost has a very high depreciation rate of fixed assets, wasting the assets of the business and society. Therefore, the law needs to stipulate that these businesses have the right to lease, sublease land attached to factories, warehouses... that these businesses


not used yet. However, the law needs to have regulations that require these subjects to have appropriate investment licenses.

Our country's legal system is being improved in the direction of ensuring equality in business among economic sectors, but the current land law stipulates that the rights of domestic economic organizations to use land are greater than those of foreign organizations and individuals investing in Vietnam. Therefore, many foreign-invested enterprises currently using land have the need to transfer land use rights, lease, sublease land with factories, ...

3.1.2.2. Awareness of land use rights

Awareness of land use rights is increasingly approaching the effectiveness and true value of land in economic development:

Foreign investment in Vietnam is an important content of the policy of economic renovation and opening. Since the Law on Foreign Investment in Vietnam was promulgated in 1987, foreign investment in Vietnam has continuously developed and achieved important results contributing to the overall success of the renovation process. In the current context, attracting foreign investment capital has truly become a fierce competition among countries in the Southeast Asian region. Therefore, improving the investment environment is an urgent requirement and a prerequisite for attracting foreign investment to Vietnam.

In recent times, as in many other areas, land policies and laws have been constantly amended and supplemented to better suit the actual situation, in order to create an open legal environment to encourage foreign investors to invest in Vietnam. New awareness increasingly expands the rights of foreign organizations and individuals to lease land in Vietnam.

With the amendment and supplementation of the Land Law of 1998 and 2001, the Law on Foreign Investment in Vietnam and the Government's issuance of documents such as:


Decree No. 04/2000/ND-CP and Decree No. 66/2001/ND-CP, September 28, 2001 on the implementation of the Law amending and supplementing a number of articles of the Land Law, Decree No. 24/2000/ND-CP detailing the implementation of the Law on Foreign Investment in Vietnam and many other Decrees to encourage foreign direct investment in Vietnam, the land use rights of enterprises with foreign investment capital have also been expanded:

- Enterprises with foreign investment capital that lease land in export processing zones, industrial parks, and hi-tech parks are now granted land use right certificates;

- Enterprises with foreign investment capital are allowed to mortgage land use rights and assets attached to land during the lease term at Vietnamese credit institutions, foreign bank branches operating in Vietnam and joint venture banks between Vietnam and foreign countries to borrow capital for business;

- The right of domestic organizations to contribute capital using the value of land use rights and assets owned by them attached to the land to cooperate in production and business with foreign organizations and individuals (Previously, only State-owned enterprises had the right to contribute capital using the value of land use rights and assets owned by them attached to the land to cooperate in production and business with foreign organizations and individuals);

- Resolved some difficulties and problems of foreign investors in compensation and site clearance by specifying compensation principles and responsibilities;

- The procedures for preparing land lease documents are increasingly simplified, clearly defined, simple and have many improvements, creating favorable conditions for investors in implementation.

3.2. Directions and solutions to improve the law on land use rights of foreign-invested economic organizations in Vietnam


3.2.1. Direction


* One is to move closer to a common international legal level;

* Second is to ensure equality in business for enterprises of all economic sectors;

* Third is to promote and attract foreign investment into Vietnam, using land economically, reasonably and effectively;

* Fourthly, gradually adapt to Vietnam's economic, social and practical conditions;

* The fifth is to ensure the following principles:

- Land is owned by the entire people and managed by the State;

- Harmonize and balance the contents of land management and use in the group of issues that occurred in the past, the group of issues that are being adjusted and the group of issues for the coming period;

- Timely amend and supplement issues that are happening in real life; at the same time, introduce regulations with orientation in the coming period associated with the development of industrialization and modernization of the country and international integration;

- Create a legal basis to encourage effective land use associated with the protection and sustainable development of the investment environment, living environment, and ecological environment;

- Legalize the law enforcement regulations that have been accepted by life, ensuring consistency in the legal system;

- Improve the effectiveness of enforcement of legal regulations;


- Perfecting the organization of state agencies on land management and clearly defining the functions, tasks and powers of agencies performing state management tasks on land, in the direction of:

+ The central government unifies a single focal point for macro-management, while localities are decentralized in management to proactively exploit land funds, associated with administrative reform in the field of management and use;

+ Divide the State land management mechanism into two types: economic land management and administrative land management , ensuring harmony and rationality between solving these two issues associated with economic development and political and social stability.

Linking the scope of State management of land with macroeconomic policies, inseparable from the laws of economic development such as the law of value, the law of competition; the dialectical relationship between the real estate market, the land use rights market with the capital market, the labor market...

3.2.2. Solution

3.2.2.1. Promote research and pilot implementation of a number of new policies, focusing on the following issues:

One is : The issue of allowing enterprises with foreign investment capital to mortgage the value of land use rights at foreign credit institutions should adhere to a number of principles:

- Regarding scope: Only pilot implementation allows enterprises with foreign investment capital to mortgage the value of land use rights at foreign credit institutions and clarify the concept of "foreign credit institutions".

- Ensure the following issues:

+ A plot of land can only be mortgaged at one credit institution;


+ Mortgaging property attached to land must of course mortgage the value of the land use rights that have that property;

+ Mortgage price as agreed by the parties;

+ Mortgage term does not exceed project term.

- Mortgage form : in writing including credit contract (according to Vietnamese law and international treaties...) and mortgage contract established according to the form issued with this decision:

+ Mortgage conditions ensure legality and feasibility;

+ Simple and strict mortgage procedures and records;

+ Handling mortgaged assets ensures the agreement of the parties, the right to file a lawsuit in Court, Economic Arbitration or Property Auction Center to auction mortgaged assets.

Second: Research the mechanism to allow domestic private sector to lease land to foreign-invested enterprises for production and business purposes . This issue needs to ensure a number of principles:

- Regarding scope and subjects of application: It should only be applied to domestic households and individuals who are using agricultural land, forestry land, residential land, and specialized land that meet certain conditions to be allowed to lease land to foreign-invested enterprises in Vietnam for production and business purposes.

- Regarding the conditions for leasing and subleasing land of households and individuals: Current law has 3 cases of land leasing and subleasing, it is necessary to study and expand to allow households and individuals to use agricultural land (including land for growing annual crops, aquaculture, and perennial crops) , forestry land (production land) , residential land (with houses attached to the land, not applicable to residential land without houses) , specialized land (for production and business,


In case of leasing residential land as a transaction office, additional procedures must be performed to change the land use purpose to be leased (sub-leased) the land use right.

For investors who need to lease land or sublease land from households or individuals, it is necessary to be bound by an investment project (approved by a competent State agency according to the Law on Foreign Investment in Vietnam).

- Regarding documents to exercise the right to lease land of individual households: Must have a certificate of land use rights or a certificate of house ownership rights and land use rights. In case there is no certificate of land use rights or a certificate of house ownership rights and land use rights but there are legal documents on land use rights, it is necessary to carry out procedures for granting a certificate of land use rights before leasing land. Attached are documents proving ownership of assets on land with assets attached to the land (if any).

- Land leasing of households and individuals: If it is a household, it must be done by the head of the household; if the head of the household cannot do it directly, the head of the household shall authorize a member of the household to do it. This authorization must be in writing and certified by the People's Committee of the commune, ward or town where the person resides in accordance with the provisions of law. If it is an individual, it must be done directly by that individual.

- Regarding the purpose and duration of land use in the land lease area: After leasing or subleasing land, the investor must use the land for the correct purpose and within the assigned or leased period. In the case of leasing land to build transaction headquarters or offices, households and individuals may be allowed to lease residential land (with a change in land use purpose) but must complete procedures to change the land use purpose.


- Regarding the lease and sublease term: The term is agreed upon by the parties but does not exceed the remaining term of the land allocation and lease term for households and individuals leasing land.

- Regarding land lease and sublease records, it is necessary to simplify them but still ensure legality, so it is only necessary to manage the following documents: Land lease contracts, sublease contracts (must be made according to the form to ensure the rights of households and individuals in the current conditions of Vietnam (responsibility is made by both parties in Vietnamese). Land use rights certificate (responsibility is carried out by households and individuals). Land plot diagram (excerpt of land plot map or field measurement, responsibility is agreed upon by both parties). Documents for payment of land use fees or land rent in cases where households and individuals are allocated or leased land by the State (responsibility is carried out by households and individuals). Approved investment projects (responsibility is carried out by the lessee or sublessee).

- Regarding the procedures for land leasing and subleasing, it is necessary to simplify them according to the one-stop mechanism . Land leasing and subleasing documents are unified in one place: submitted to the district-level Land Office where the land is located.

The district-level Land Office examines the dossier, confirms the land sublease contract in the case of land lease, re-renting land in the land change registration book, sends a notice to the People's Committee of the commune, ward or town where the land is located; if the land is not leased or re-rented, the dossier is returned and the party concerned is informed of the reason for not leasing or re-renting the land. From here, the land lessor or re-lessee must register the land sublease at the People's Committee of the commune, ward or town where the land is located. Finally, the documents are returned to the parties, the State agency only keeps one copy of the land lease or re-rent contract for management.

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