With geographical advantages and a large market, along with the diversification of supply chain strategies by multinational manufacturers, Vietnam is increasingly developing and becoming an ideal destination for foreign investors to establish foreign direct investment (FDI) companies. In 2024, Vietnam’s FDI attraction reached USD 38.23 billion, surpassing the figure in 2023 (USD 36.6 billion), with both the quantity and quality of FDI capital improving, thereby contributing to economic growth. The increasing establishment of FDI companies entails numerous legal risks in leasing factory land for production, business, and processing purposes. So, how can these legal risks be mitigated? In the following article, Viet An Law will provide essential information regarding FDI factory land legal due diligence services in Vietnam.
Regulations on leasing factory land to FDI companies
Regulations on Land use rights
Pursuant to Article 41 of the Land Law 2024, FDI companies are not permitted to own land in Vietnam but may only use land through leasing arrangements with domestic organizations or individuals. FDI companies may lease land for the construction of factories for long-term use, depending on the agreement with the land use right holder.
Regulations on Land use purposes
FDI companies can lease factory land for production, processing, business, storage of goods, etc., purposes in accordance with the business lines stated in the Investment Registration Certificate and Enterprise Registration Certificate. FDI companies are not allowed to use factory land for production or business in prohibited fields of law.
Regulations on Financial obligations
FDI companies must fulfill their obligations to pay factory rent, taxes, costs related to the use of assets, including maintenance fees, property taxes (if any), and other costs related to the use of leased assets on time according to the terms of the lease contract. Payments can be made monthly, quarterly, or as agreed by the parties.
Why is it necessary to conduct FDI factory land legal due diligence in Vietnam?
- Ensure legal compliance: assess whether the lessor is the legal user of the factory land and has ownership of related assets in the factory. The assessment will be based on the land use right certificate and documents proving ownership of the factory.
- Detect and minimize legal risks: Legal risks related to land are often extremely complex and difficult to resolve. Legal examination of factory land helps FDI companies know whether the factory land they intend to lease is in dispute, violates planning or has any unfulfilled legal obligations (tax obligations, etc.)? Legal examination of factory land helps FDI companies detect and minimize legal risks, resolving these risks before constructing and using the factory.
- Protect the rights and interests of all parties: the examination helps protect the rights of the owner of the factory land use right certificate, investors and related parties.
- Accurate land lease decision: for investors, land legal due diligence helps investors decide whether to lease factory land in that area or choose to lease in another more reasonable and safer area.
- Cost savings: early detection of risks helps FDI companies avoid additional costs related to taxes, disputes, litigation, etc.
FDI Factory Land Legal Due Diligence Services in Vietnam of Viet An Law
- Experienced team of lawyers and experts: Viet An Law provides a team of lawyers and experts with rich knowledge and experience in the field of factory land legal due diligence, to provide the most accurate and optimal consultancy to foreign investors.
- Quality of reporting: Our due diligence report is detailed, clear and easy to understand, with specific recommendations to address potential risks for FDI companies.
- Dedicated and enthusiastic consultancy: Viet An Law has a team of dedicated and enthusiastic experts, always answering all customer questions quickly and accurately, helping to resolve difficulties that may arise during the factory land legal due diligence for FDI companies.
- Information security: Viet An Law commits to keep all customer information confidential in all cases.
- Reasonable cost.
- We are always ready to support customers to the best of our ability, always ensuring that customers feel comfortable and at ease because of our friendliness in communication and professionalism in work; creating peace of mind and trust.
- We are always ready to support customers to the best of our ability, always ensuring that customers feel comfortable and at ease because of our friendliness in communication and professionalism in work; creating peace of mind and trust.
Procedure for conducting FDI factory land legal due diligence services in Vietnam
Step 1: The customer provides information about the factory land and related information.
Step 2: Viet An Law makes a plan to legally examine the factory land.
Step 3: Viet An Law examines the legality of the factory land.
Step 4: Draft the legal due diligence report and send it to the customer.
Contact information of Viet An Law
Hanoi office:
- Address: 3rd Floor, Hoang Ngan Plaza, 125 Hoang Ngan, Trung Hoa, Cau Giay, Hanoi
- Tel: (024) 66 64 06 06 – (024) 66 64 05 05
- Phone: 0961 371 818
- Email: hanoi@vietanlaw.vn
Ho Chi Minh city office:
- Address: Room 4.68 4th Floor RiverGate Residence, 151-155 Ben Van Don, Commue 9, Distric 4, Ho Chi Minh city..
- Tel: (028) 36 36 29 65 – (028) 36 36 29 75
- Phone: 0961 571 818
- Email: saigon@vietanlaw.vn
Customers who need advice on FDI factory land legal due diligence services in Vietnam, please contact Viet An Law for the best advice and support!
