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SURVEY

Legal Framework / Land

Land (5/6/2009)

In Vietnam, land is public property which the state executes rights of public ownership representative and land management. Land management is decentralized with different levels. The National Assembly issues laws and other legal documents on land, land planning, land utilization plan for the whole country; while the Government has rights to make decisions on land plan, land utilization at provincial or municipal levels and decisions on national land management; and the People’s  committee  at various levels execute their rights of being the state’s representative for land ownership and utilization at local level; the Ministry of Environment and Natural Resources with support from provincial departments of environment and natural resources and other related management agencies of environment and natural resources implement the regular state management work relating to land.

All citizens, organizations, enterprises shall not be entitled to own land, yet they are entitled to utilize land. It means that they shall have rights to use land, land transfer to others for usage, lease, and heritage or present the land use rights or use land as a means of mortgage or as a contribution to capital of an enterprise in kind. These rights to use land shall be revised or accommodated following the Civil law, Land law and other related legal documents. The state ensures all rights and benefits of land users by granting a certificate of land use rights (legal certification to protect rights and legal benefits of land users) to land users. 

In aspects of land use by foreign investors, the Vietnam land law currently entitles Vietnamese enterprises to buy/sell the land use rights while foreign investors have not yet been entitled to this right. However, foreign investors can be entitled to land use through 1) direct land rental from the government competent agencies including the Vietnam government or 2) capital contribution in land use right from Vietnamese joint venture companies.

  

Land lease

 

Any foreign organizations, individuals or Vietnamese overseas can directly rent land from the Government of Vietnam after setting up foreign invested enterprises in Vietnam if needed Decision on land rental will be based on specific land planning or detailed land use plans or specific urban development plan or specific rural and public development plan which has been approved by the government competent offices. In case there have not been any specific land use plans, decisions can be made based on land use planning approved by the competent agencies. Land hand-over profile includes investment acceptance document attached with the investment project documents approved by the government investment holder following the investment law and comprehensive ground or floor. For foreign organizations, individual and Vietnamese overseas, the profile is based on the investment certificate and comprehensive ground plan or design.

 

Foreign organisations or individuals shall be entitled to rent land from the state for production, business development in industrial areas or they can re-rent from foreign and domestic organisations and individuals who invest in construction and business development of basic infrastructure in industrial areas with simple procedures. For office rental in trade buildings, procedures are more simple without requiring acceptance or approval from the Vietnamese competent agencies.

 

Capital contribution by rights to land use in joint venture companies

 

In accordance with the current land law, Vietnamese parties can contribute to capital of enterprises in land use rights. In case of land rental, Vietnamese parties can contribute to the enterprise’s capital by rights to land areas which have been leased  by the Government if Vietnamese parties have rented the land areas before the effective date of the new land law on July 1st, 2004 and that all land rental expenses for the whole duration of most of duration have been paid.  After receiving investment certificate, certificate of land use shall be granted and named with the joint venture company.

  

Land use right prices (land prices)


Land related prices are publicized yearly by the provincial people’s committees on January 1st based on the land law. The prices will be also foundations for calculating land use tax, income tax from land hand-over activities, to calculate price for land use and land rental when transferring to new owners without auction rights to land use or project bidding activities relating to land use, land registration fees, and to calculate for compensation when violations of land use occurs which harm or cause destruction to the state etc. Besides cases stipulated by the state, land prices in Vietnam are also established based on 1) auction of the rights to land use or bidding for projects with land use 2) Decisions made or negotiations between land users with related parties when carrying out hand-over, land rental/lease or capital contribution in lands.

 

Limitation period of land use

 

Limitation period of land transfer or land lease applied to economic entities for purposes of agricultural, foresty, aquacultural and salt production; applied to economic entities, households and individuals on purpose of building houses or use ground for building manufacturing areas or doing business; applied to economic entities for implementing investment projects; applied to Vietnames overseas, foreign organisations and individuals to implement investment projects in Vietnam shall be considered based on decision on investment projects or the applications for land use and land transfer activities, however the maximum period is 50 years. For projects requiring large capital investment, yet slow capital returns or projects investing in difficult socio-economic condition areas, investment projects in typically socio-economic difficult areas requiring longer duration, limitation period of land rental and land hand-over activities will be longer, yet not exceeding 70 years.

 

When the limitation period expired, land users shall be entitled to request for extensions if they have needs and if they comply land laws during the process of land use and if the use of that land areas is still in line with approved land planning.

 

Ground/site clearance

 

To create favorable conditions for and encourage invesments in Vietnam, the new land law stipulates that the State shall be responsible for compensation, support to re-settlement and site clearance activities. Any foreign organisations or individuals investing in Vietnam shall not pay any compensations or support to the resettlement activities. In cases land users have to pay for any expenses relating to land rental or compensations, these expenses will be deducted from land rental expenditure to be covered by the State.

 

Land mortgage

 

In aspects of mortage, guarantee land use rights, foreign investors are not limited to values of land use rights associated with their own properties invested in the construction work in that land zone at Vietnamese banks during the land lease period as before. Presently 100% foreign invested enterprises and joint venture companies which are offered land lease by the governement, shall be entitled to use land use rights as a mortage with assets attached with the leased land zones at any Vietnamese creditors including branches of foreign banks in Vietnam if they already pay full land rental fees for the whole period or have paid amount of land rental fees for almost land lease period and the limitation period of land lease still lasts at least 5 years.

 

Land recovery

 

According to the Vietnam land law, the Government has rights to land recovery for objectives of national defence and security, national interest, public interest, or economic development, building industrial, hi-tech, economic zones or in cases that land is used for the inproper purpose or used inefficiently, or land users intentionally destroys land, or land is allocated to the incorrect subject or not in accordance with authority;

 

The Government has rights to recover leased land or lands granted to parties including foreign parties. In these cases, land users if having certificate of land use rights or meeting sufficient conditions for being granted with land lease can apply for new land lease or can be compensated as same values as land use rights at the time of land recovery (except for cases as stipulated at the

Article 38 and 43 in the land law). If land users do not follow the decision on land recovery, there would be coercion as stipulated in the decision of the relevant competent people’s committee on land recovery.

 

One important note to all enterprises involved in procedures of land use rights is that all papers and documents must be certified by the authorised agencies.

 

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