The acquisition of land use rights is a key factor for implementing investment projects. However, foreign-invested enterprises face complex legal regulations. Therefore, these regulations require strict compliance with conditions and procedures. DNP Vietnam Law Firm will provide a detailed analysis to clarify this issue.
1. Definition
Clause 19, Article 3 of the 2020 Law on Investment defines a foreign investor as a foreign individual or organization. This individual or organization must conduct business investment activities in Vietnam in accordance with the law. Similarly, Clause 46, Article 3 of the 2024 Land Law defines a foreign-invested economic organization. Notably, this definition is consistent with Clause 22, Article 3 of the 2020 Law on Investment. Consequently, these organizations may acquire or contribute capital in the form of land use rights to carry out investment projects. The legal basis for this is Point d, Clause 1, Article 28 of the 2024 Land Law.
2. Conditions for Acquiring Land Use Rights for Investment Projects
Points c and d, Clause 1, Article 28 of the 2024 Land Law set out regulations on land acquisition for foreign-invested organizations. These provisions define the conditions under which such organizations may acquire land use rights. Specifically, they are permitted to obtain land use rights within industrial parks, industrial clusters, and high-tech zones, provided they comply with applicable laws. In addition, FDI enterprises may receive capital contributions in the form of land use rights. However, such transactions must comply with specific regulations issued by the Government.
Furthermore, Article 9 of Decree No. 102/2024/NĐ-CP provides detailed regulations on the transfer of investment capital in the form of land use rights. Under this provision, organizations may receive capital contributions equivalent to land use rights. Importantly, these rights must come from economic organizations that are currently using the land. Moreover, the State must have allocated the land with land use fees or leased it with a one-time payment for the entire lease term. Additionally, the transferring economic organization must have included the value of the land use rights in its charter capital.
Nevertheless, in sensitive areas, authorities impose restrictions on the transfer of investment capital in the form of land use rights. These areas include border communes, wards, and townships; coastal areas; islands; and other regions deemed critical to national defense and security. Therefore, such transfers must strictly comply with the Law on Investment and other relevant legal regulations.
3. Rights and Obligations
FDI enterprises using land contributed as capital in the form of land use rights are subject to specific rights and obligations. Specifically, these are stipulated in Clause 1, Article 42 of the 2024 Land Law and are further governed by land and investment laws.
They must use the land for the correct purpose and within the permitted timeframe. They must fulfill all financial obligations. Transactions such as transferring, leasing, or mortgaging the land must comply with current legal regulations. Violations may result in penalties, land revocation, or non-recognition of land use rights.
3.1. Rights and Obligations under Clause 3, Article 41 of the 2024 Land Law
(i) FDI enterprises receiving capital contributions in the form of land use rights sourced from State-allocated land (with land use fees) or land leased with one-time payment must comply with the rights and obligations set out in Clause 3, Article 41 of the 2024 Land Law.
(ii) FDI enterprises converted from joint ventures that received capital contributions in the form of land use rights shall be handled by the State as follows:
(+) Lease land with one-time payment if the land is not used for housing development for sale; or
(+) Allocate land with land use fees if the land is used for housing development for sale.
3.2. Rights and Obligations under Clause 2, Article 41 of the 2024 Land Law
Foreign-invested economic organizations converted from joint venture enterprises, in which the Vietnamese party had previously contributed land use rights (not intended for housing projects for sale), shall be leased land by the State with annual land rental payments in accordance with the provisions of this Law.
4. Procedures for Acquiring Land Use Rights
4.1. Implementation Steps
According to Article 60 of Decree No. 102/2024/NĐ-CP, the procedures for an economic organization to acquire, lease, or receive capital contributions in the form of land use rights for implementing an investment project are as follows:
(i) Submission of Request
The economic organization prepares a land location extract for the proposed investment project and a written request using Form No. 07 (provided in the Decree’s Appendix), then submits them to the Provincial People’s Committee where the land is located.
(ii) Appraisal
Within 03 working days from receipt of the request, the Provincial People’s Committee assigns the provincial land management authority to lead the appraisal, coordinating with relevant agencies.
Within 15 days from receiving the directive from the Provincial People’s Committee, the land management authority must issue an appraisal report.
The contents of this report are specified in Clause 3, Article 60 of the Decree.
(iii) Approval Decision
The Provincial People’s Committee must act within 05 working days from the date of receiving the appraisal report. During this time, it shall review the proposal and issue a written decision. The decision may either approve or reject the land acquisition, lease, or capital contribution.
The approval must clearly state:
- Project scale, area, and location;
- Deadline for completing agreements;
- Other relevant contents.
The Provincial People’s Committee sends this decision to the requesting organization.
(iv) Implementation
Based on the approval, the economic organization proceeds with the land acquisition, lease, or capital contribution to implement the investment project.
If the investor needs to change the land use purpose, they must follow the procedures under Article 48 of this Decree.
4.2. Special Case: Restricted Land Access Areas
Specifically, if a foreign-invested economic organization acquires land use rights under Points c or d, Clause 1, Article 28 of the 2024 Land Law for projects in restricted access areas, then prior opinions from the Ministry of National Defense and the Ministry of Public Security are required, as stated in Clause 3, Article 10 of Decree 102/2024/NĐ-CP.
a) Submit a written request to the Provincial People’s Committee for permission to acquire or receive capital contribution in restricted access areas.
b) Within 05 working days of receiving the request, the Provincial People’s Committee sends an official consultation request to the Ministry of National Defense and the Ministry of Public Security.
c) Within 20 days of receiving the consultation request, the two Ministries must provide written responses to the Provincial People’s Committee.
FDI enterprises acquiring land must comply with the 2024 Land Law and Decree 102/2024/NĐ-CP. Legal compliance is particularly critical in restricted access areas. DNP Vietnam Law Firm recommends thoroughly reviewing the legal status of the land before proceeding. Investors should coordinate with authorities to ensure transparency, minimize legal risks, and promote effective, sustainable project implementation.
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