FDI  (Foreign Direct Investment) companies are companies that have foreign direct investment capital. Currently, the activities of foreign-invested companies in industrial zones are increasingly developing. One of the issues that many investors are interested in is the right to use and industrial zone land transfer rights for FDI companies in Vietnam. Thus, do FDI companies have the right to convey industrial zone land? Which legal regulations govern this issue? In this article, Viet An Law will answer the above questions for clients.

What kind of land is industrial zone land?

Pursuant to point dd Clause 3 Article 9 of the Land Law 2024:

 “Article 9. Land classification

… 3. The category of non-agricultural land includes:

.. dd) Land used for non-agricultural business and production purposes, including land for industrial parks and industrial clusters; land used for trading or service purposes/commercial land; non-agricultural production establishment land; land used for mineral-related activities;”

Thus, industrial zone land is identified as non-agricultural land, specifically land used for non-agricultural business and production purposes.

Are FDI companies allowed to receive conveyed industrial zone land?

Pursuant to point c Clause 1 Article 28 of the Land Law 2024, foreign-invested business organizations and persons of Vietnamese descent residing overseas who are permitted to enter Vietnam have the right to use industrial parks, industrial clusters, and high-tech parks that are conveyed from others.

Thus, FDI enterprises are allowed to receive conveyed industrial zone land.

Moreover, according to Article 28 of the Land Law 2024, FDI enterprises can also receive the transfer of investment capital in the form of land use rights; Receive capital contributions in the form of land use rights; Be allocated land by the State to carry out projects for investment and construction of housing for sale or for both sale and lease; Be leased land by the State;…

In what form can FDI companies lease land in an industrial zone?

According to Clause 2, Article 149 of the Land Law 2013, the State shall lease the land to foreign-invested enterprises, including FDI companies, to invest in the construction and commercial operation of infrastructure of industrial parks, industrial clusters, and export processing zones.

FDI enterprises can lease land from the state under an one-off arrangement or annual land rent payments according to Article 120 of the Land Law 2024. Specifically:

Land lease with a lump-sum payment

The State will lease out land with a lump-sum payment for the entire lease term in the following cases:

• Land in industrial parks, industrial clusters, high-tech parks, and worker accommodation in industrial parks is used; land is used for both public and business purposes; commercial land is used for tourism and office business activities.
• Land is used to construct social rented housing according to housing laws.

Land lease with annual rent payments

The State will lease out land with annual land rent payments for the entire lease term  in the following cases:

• Cases of land lease are not entitled to a lump-sum payment;
• Cases of land lease are entitled to a lump-sum payment where a demand for annual land rent payments is issued;

Accordingly, pursuant to Article 30 of the Land Law 2024, FDI companies are allowed to choose one of the land rent payment methods as follows:

• FDI enterprises are leasing land from the State with annual land rent payments for the entire lease term, or may make a lump-sum payment of land rent for the entire lease term. However, the land price for the calculation of land rent at the issuance date of the decision to permit lump-sum payment of land rent must be re-determined.
• FDI enterprises are leasing land from the State with a lump-sum payment for the entire lease term, or may make annual land rent payments.

Do FDI companies have the right to convey industrial zone land?

Pursuant to Clause 2, Article 43 of the Land Law:

“Article 43. Rights and obligations of persons of Vietnamese descent residing overseas and foreign-invested business organizations using land in industrial parks, industrial clusters, and high-tech parks

…2. A person of Vietnamese descent residing overseas or a foreign-invested business organization that leases land or subleases land in industrial parks, industrial clusters, or high-tech parks shall have the following rights and obligations:

…a) The rights and obligations prescribed in clause 1 and clause 3 of Article 33 of this Law in case of a one-off arrangement;

…b) The rights and obligations prescribed in clause 1, Article 34 of this Law in case of annual rent payment.”

Referring to Article 33 and Article 34 of the Land Law 2024, it can be observed that:

• In the case of FDI enterprises leasing land with a lump-sum payment for the entire lease term: Rights to convey land use rights and privately owned property affixed to the land (Point b, Clause 1, Article 33).
• In the case of FDI enterprises leasing land with annual payments: No rights to convey land but rights to sublease land use rights with annual land rent payments of land on which industrial park infrastructure has been constructed in case where the organizations are permitted to invest in infrastructure for commercial purposes (Point e, Clause 1, Article 34).

Thus, FDI enterprises have the right to transfer land in industrial parks if they have a lump-sum payment for the entire lease term. If they lease land with annual payments, enterprises only have the right to sublease the land use rights and do not have the right to convey the land.

Conditions for land concession by FDI companies in Vietnam

According to Article 45 of the Land Law 2024, land users in general and FDI enterprises in particular are entitled to convey land when adapting to the following conditions:

• Having a Certificate of land use rights or a Certificate of home ownership and land use rights of homestead land or a Certificate of land use rights, ownership of housing and property affixed to land or a Certificate of land use rights, ownership rights of property affixed to land;
• The land is not in dispute or has been resolved beyond dispute by a competent regulatory agency, under a judgment or decision of a Court, a decision or ruling of an arbitrator that has taken legal effect;
• The land use rights must not be subject to distraint or other coercive measures to ensure the judgment enforcement complies with civil judgment enforcement laws;
• Such rights are exercised within the land use term.
• The land use rights must not be subject to provisional emergency measures in accordance with the laws.

Land use term in the industrial zone

Under Clause 4, Article 202 of the Land Law 2024, the land use term of an investment project in an industrial zone or industrial cluster depends on the operating term of the investment project.

In case the operating term of the investment project is longer than the remaining land use term of the industrial park, the investor must request permission from the competent regulatory agency to adjust the land use term accordingly, but the total land use term must not exceed 70 years and must pay land use fees or land rent for the land area whose use term is adjusted.

Above is the advice on industrial zone land transfer rights for FDI companies in Vietnam. If you have any related questions or need consulting on land law, please contact Viet An Law for the best advice and support!