Leasing land in an industrial zone is crucial for foreign investors aiming to implement manufacturing projects in Vietnam. This article provides a detailed guide on the procedures, formalities, and legal issues related to leasing land in industrial zones.
Application for land lease using Form No. 02b of Decree 102/2024/ND-CP (including details of the land plot/area, size, intended use, lease term, and related documents).
Copy of the document approving the investment project, decision on investment policy approval, decision on investment policy approval combined with investor approval; and document approving the investor selection results for public-private partnership projects (if any).
Copy of the document from the competent state agency approving the investor (Clause 5, Article 124 of the Land Law).
Copy of the document from the agency assigned to organize the unsuccessful land use rights auction results (Point b, Clause 6, Article 125 of the Land Law).
Copy of the document on the results of the real estate project transfer (Clause 7, Article 124 of the Land Law).
Copies of documents as required by law (Point i, Clause 1, Article 133 of the Land Law) for land recovery.
1.2. Legal Status Requirements
According to Article 120 of the 2024 Land Law, the State leases land in industrial zones either as a one-time payment for the entire lease term or as annual payments when there is a need for annual payments.
Foreign entities, including organizations, individuals, or enterprises with foreign investment capital, are permitted to lease land in industrial zones for manufacturing and business projects. The land lease must align with the local economic development planning and land use plans. Specifically, it must ensure:
Valid legal status in the host country.
Not being in a state of bankruptcy or dissolution.
Financial capacity to implement the project.
2. Application Submission and Approval Process (Articles 44, 49, Decree 102/2024/ND-CP)
Apply to the One-Stop-Shop Department as per the provincial People's Committee regulations.
The agency conducts a dossier appraisal and assesses the land use needs: verifying the project's legality, determining the effective land use capacity, and reviewing the area's land use planning.
Notify the enterprise of financial obligations related to the land lease, including land rent, registration fees, and other fees.
Maximum processing time: 20 days from the date of receiving a valid application.
After fulfilling financial obligations, the enterprise will receive the land lease decision. Both parties will sign the land lease contract, and the enterprise can proceed with activities as per the approved project.
After signing the land lease contract, the enterprise can request to issue a land use rights certificate for the lease term.
This procedure ensures that foreign investors can legally and effectively lease land in industrial zones in Vietnam, facilitating the implementation of their manufacturing projects.
3. Negotiation and Signing of Contracts
3.1. Key Terms
1. Area and Location of Leased Land:
Area: Specify the leased land area in both numerical (m²) and written form to avoid any confusion.
Location: Provide a detailed description of the land's location, including administrative address, adjacent boundaries, and coordinates on the cadastral map, along with any available drawings or location diagrams.
2. Lease Term:
Clearly define the lease duration, including the start and end dates of the contract.
Ensure the lease term complies with legal regulations and meets the lessee's usage requirements.
3. Lease Price and Payment Method:
Lease Price: Specify the lease rate (unit price per m² and total amount), indicating whether it includes related taxes and fees.
Payment Method: Detail the payment form (cash, bank transfer), payment intervals (monthly, quarterly, annually), and conditions related to late payments or advance payments.
4. Rights and Obligations of the Parties:
Lessor:
Transfer the land in the agreed area, location, and condition.
Ensure the lessee's land use rights throughout the contract term.
Provide legal documents related to land use rights.
Lessee:
Use the land for the agreed purpose, within the specified boundaries and terms.
Pay the lease amount fully and on time.
Comply with environmental protection, labor safety, and other relevant legal regulations during land use.
5. Conditions for Contract Termination:
Specify circumstances under which the contract may be terminated early, such as:
Serious breach of contract terms by either party.
Lessee's prolonged non-use of the land without valid reasons.
The decision by a competent state agency to revoke the land.
Outline notification requirements before contract termination and the responsibilities of both parties upon termination.
3.2. Considerations Regarding Lease Price
1. Factors Influencing Lease Price:
Location of the Industrial Zone: Industrial zones near major urban centres, seaports, or airports typically have higher lease prices due to convenient transportation and abundant labour resources.
Land Area and Shape: Larger, well-shaped plots often command higher lease prices compared to smaller, irregularly shaped ones, as they allow for more efficient land use and cost-effective construction.
Infrastructure: Industrial zones with well-developed infrastructure, including transportation, electricity, water, and telecommunications, generally have higher lease prices than those lacking such amenities.
Lease Term: Enterprises may negotiate better lease rates for longer-term leases, providing investors with stable income and reducing the risk of vacancies.
2. Current Average Lease Prices:
According to the Ministry of Planning and Investment, the average lease price for industrial zones in Vietnam currently ranges from $40 to $100 per m² per year, depending on the location and infrastructure of the industrial zone. However, some industrial zones have higher lease prices, reaching $150 to $200 per m² per year.
Lease prices also vary by region. The Ministry of Planning and Investment reports that the North has an average lease price of $40 to $60 per m² per year, the Central region $50 to $80 per m² per year, and the South $70 to $100 per m² per year.
Within the South, cities like Ho Chi Minh City and Binh Duong have higher lease prices compared to provinces like Dong Nai or Long An. However, lease prices in these provinces are also rising due to increasing demand for industrial land in the area.
4.1. Rights (Articles 26, 33, 34, 43 of the 2024 Land Law)
1. Proper Land Use:
Investors are entitled to lease land for activities specified in their approved investment projects.
2. Transfer and Sublease:
If the land rent is paid in a lump sum for the entire lease term, investors have the right to transfer or sublease their land use rights and attached assets during the lease period.
If the land rent is paid annually, investors may sublease their assets attached to the land and the lease rights specified in the land lease contract.
3. Mortgage and Capital Contribution:
Investors can mortgage their land use rights and attached assets at authorized credit institutions in Vietnam.
They may contribute capital using their land use rights and attached assets for joint production and business ventures.
To learn more about the rights of foreign investors in Vietnam's industrial zones, please refer to the article: Investment Incentive Policies for Manufacturing in Vietnam's Industrial Parks 2025.
4.2. Obligations (Articles 31, 33, 34, 43 of the 2024 Land Law)
1. Financial Obligations:
Investors must fully and timely pay land rent, taxes, and related fees as prescribed by law.
2. Effective Land Use:
They are required to utilize the land within the specified timeframe, avoiding land abandonment or misuse.
3. Legal Compliance:
Investors must adhere to regulations concerning environmental protection, fire safety, public order, and other relevant laws during land use.
4. Periodic Reporting:
They are obligated to provide information and reports on land use and project implementation as requested by competent authorities.
5. Legal Issues to Consider
Investors should pay particular attention to:
1. Compliance with Environmental Protection Regulations: Investors must conduct environmental impact assessments (EIAs) for their projects, analyzing and proposing measures to mitigate negative environmental impacts. EIAs must be appraised and approved by relevant authorities before project implementation.
2. Ensuring Occupational Safety: Adherence to occupational safety regulations is mandatory. Investors should develop and implement measures to ensure worker safety, including providing protective equipment, organizing safety training, and complying with labor hygiene standards.
3. Adherence to Construction Planning: Investors must ensure that the construction of factories, warehouses, and other facilities aligns with detailed construction plans approved by competent authorities. Non-compliance with these plans may result in penalties or orders to dismantle structures.
4. Dispute Resolution in Accordance with the Law: In the event of disputes, investors should resolve them according to legal provisions, possibly through negotiation, mediation, or litigation. Dispute resolution must follow procedural regulations and protect the legitimate rights of all parties involved.
Conclusion
While the process of leasing land in industrial zones can be complex, with thorough preparation and adherence to the outlined steps, foreign investors can navigate the procedures effectively. For detailed assistance, please contact us at:
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