Currently, many foreign investors have a desire to transfer their production lines to Vietnam. In order for the investment process to go smoothly, foreign investors should take note of the following issues.
- Note the legal regulations regarding land leasing in industrial zones.
According to the 2013 Land Law, businesses engaged in infrastructure are allowed to lease land by the State for the purpose of constructing industrial zone infrastructure in two forms:
- One-time land lease payment.
- Annual land lease payment.
Regarding the part of land leased with a one-time payment: Businesses are permitted to sublease the land attached to the infrastructure to other businesses. The subleasing can also take two forms:
- Annual land payment.
- One-time land lease payment for the entire lease period.
For the part of land leased with annual payment: Businesses can only sublease the land using the annual payment method.
- The case of foreign investors acting as sublessees of industrial land.
For foreign investors acting as sublessees of land, it is important to note the differences between two forms of payment as follows:
2.1. Case of one-time land lease payment In this case, the sublessee will enjoy the following rights:
- Transfer the right to use the land.
- Mortgage the right to use the land.
- Contribute capital to another company using the right to use the land.
2.2. Case of annual land lease payment In this case, the sublessee will have some limitations on rights, such as:
- Inability to transfer the right to use the land.
- Only allowed to exercise the rights mentioned in section 2.1 regarding assets attached to the land.
- Considerations for State Land Lease and Land Subleasing.
In practice, there are businesses that lease state-owned land on an annual payment basis. When these businesses sublease the land along with the associated infrastructure, they usually allocate the rental payment into two parts:
- Annual land lease payment.
- Cost of infrastructure usage (CIU).
CIU often accounts for a significant portion of the total payment and must be paid upfront for the entire lease duration. Foreign investors should take this into consideration because the rental price set by the government is usually lower than this cost. They can choose the most convenient option for themselves between the two forms.
Furthermore, when an investor subleases the land to another party, they must obtain the consent of the original lessor. This can potentially lead to disputes and complications among the parties involved.
To obtain clear legal advice on investment regulations in Vietnam, it is crucial for investors to have a highly competent legal team that can provide guidance on procedures and investment documents in Vietnam. With the support of their legal team, investors can avoid unnecessary disputes.
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HMLF is a Law Firm licensed to provide legal services to Enterprises. With over 70 years of experience in:
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HMLF is always available to offer assistance in understanding the procedures with authorities.
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn
