In recent times, the regulations on Foreign Invested Enterprises (FIE) in the Land Law of Vietnam have been continuously improved, creating a legal basis for the effective implementation of land management and policies for FIE, contributing to fully institutionalizing the Party’s policy on attracting foreign investment in the period of international economic integration. However, the regulations on FIE in the 2013 Land Law still have limitations and shortcomings; need to be further revised and supplemented for perfection.
About FIE gaining land use rights
The 2013 Land Law continues to establish that FIE have the right to select the way of obtaining land, whether through the State or from the market, based on the inheritance, development, and codification of the provisions of land legal instruments. At the same time, the 2013 Land Law mandates in the direction of increasing the forms of acquiring land use rights of foreign-invested firms for each manner of accessing land.
In case a foreign-invested enterprise chooses the method of accessing land from the State, the 2013 Land Law stipulates two forms of land use:
1) The State allocates land with a collection of land use levy to implement the housing business investment project for the purpose of selling or combining sale and lease.;
2) The State leases the land with annual rental payment or one-off rental payment for the entire lease period.
In case a foreign-invested enterprise chooses to access land from the market, it can choose one of the following methods:
1) Receive the transfer of investment capital as the value of the land use right;
2) Receive capital contribution by land use right;
3) Lease or sub-lease land in industrial parks, industrial clusters, export processing zones, high-tech zones, and economic zones.
These regulations have basically established equality in land access rights of foreign-invested enterprises with domestic enterprises, contributing to creating favorable conditions for FIE to use the land stable and long-term use to implement investment projects.
Rights and obligations of FIE using land
In addition to the provisions on general rights and obligations like other land users, the 2013 Land Law stipulates the rights and obligations of FIE in each specific case. These regulations recognize the rights and obligations of FIE are close to the rights and obligations of domestic economic organizations, the inequality has collected almost maximally narrow in rights and obligations between these two groups of subjects. In particular, in some cases, the rights and obligations of FIE is equivalent to domestic economic organizations.
According to the provisions of the Land Law 2013, in case of receiving land use right through being allocated land by the State with the collection of land use levy or by being leased land by the State with the collection of one-off land rental for the entire lease period, the right of Foreign-invested enterprises are still more restricted when they are not given land use rights like domestic economic organizations.
In fact, in addition to the cases of receiving land use rights listed in Article 169 of the Land Law 2013, Foreign Invested Enterprises can receive land use rights in the following cases: lease, sub-lease the land use rights of domestic economic organizations; receive land use right through the purchase of houses and construction works to use as offices, production, business and service establishments; receive the land use right in case of enterprise reorganization (foreign-invested enterprises divide, separate, consolidate or merge enterprises). Apparently, the regulations on cases of receiving land use rights of FIE in the Land Law 2013 are not comprehensive and inconsistent with other legal documents.
Conclusion
The lack of consistency in legal documents on the right to transfer assets attached to land leads to limited transactions of transfer of land use rights and land-attached assets, adversely affecting the current business activities of real estate market in our country. Regulations distinguishing the way to access land resources between domestic investors and foreign investors must have a convincing basis, based on necessity and clear purpose. As for the regulations on the rights of FIE and overseas Vietnamese to use land in Vietnam, the competent authority should review and evaluate each content accordingly.
The current amendment of the Land Law is still in the process of being finalized to be in line with global standards. Being able to implement more appropriate regulations after the amendment of the Land Law will help Vietnam mobilize larger and more effective capital from foreign investors. Investment cash flow is very flexible and will find the most business-friendly place. Foreign capital will flow to countries with good regulatory frameworks, including land laws. Vietnam wants to attract global financial resources and in fact, Vietnam is also an attractive destination for this capital flow.
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HMLF is a Law Firm to provide legal services to Enterprises especially FIE companies that want to invest in Vietnam. With a team of experts and staff of HMLF try to provide optimal solutions to bring customers satisfaction when experiencing legal services.
Harley Miller Law Firm “HMLF”
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