Update on the new Land Law

After long days of discussion at a referendum, the National Assembly of the Socialist Republic of Vietnam ratified the Land Law on 18 January 2024, (the “LL 2024”), which will be enforceable from 1 January 2025. In this update, we will focus on the crucial changes in being allocated, leased, and repurposed by state agencies for foreign-invested enterprises.

Rights of foreign-invested organizations allocated and leased by state agencies:

Regarding the definition of a foreign-invested enterprise, the LL 2024 supplements the criteria to identify itself as a foreign-invested enterprise to carry out projects tied to land use rights.

In the case of allocation of land with a land use levy by the state and leasing with a land use levy in the lump sum, foreign-invested enterprises shall be treated in the same way as domestic enterprises that are entitled to transfer, lease, sublease, pledge, gift and contribute land use rights and land-related assets.

In the case of leasing land use rights with an annual land use levy, foreign-invested enterprises are allowed to transfer, lease, mortgage or contribute land-related assets and sell, lease land-related assets and leasehold rights in land lease contracts if the assets have been legally established, construction has been completed based on an approved detailed construction plan, and compensation, support and resettlement have been paid in advance and the land use rights levy has not been deducted.

However, the new regulations also extend the rights of land users to sublease the annual land use rights when infrastructure is completed on land in industrial parks, industrial clusters and export processing zones.

Land expropriation:

LL 2024 supplements the criteria for the expropriation of land upon termination of the investment project. In addition, the new regulations stipulate that in the event of expropriation of land by the state for national defense or security purposes, socio-economic development in the national or public interest, investors will receive compensation if the land was allocated to them with a land use fee or leased with a land use fee in the form of a lump sum.

The compensation is calculated according to the amount of money or land use rights based on local socio-economic conditions and the current land use rights fund. Under this principle, land users have the right to choose any exchange value.

Allocated and leased the land use right without biding to select investors and auction of land use right:

LL 2024 clearly explains both the cases of allocation and leasing of land use rights without auctioning land use rights and bidding for investor selection.

While the land that will be auctioned must be within the transportation access and detailed planning 1/500 approved by the state authorities, the land that will be offered for investor selection includes the land that will implement the project and the land that will be managed by the state authorities includes the land specified in the law on auction or relevant legislation, or the land that is expropriated to promote socio-economic development, public, the land of urban area construction with functions multi-services, synchronized both technical infrastructure and social infrastructure under the condition that the planning 1/2. 000 of land bid to select investors is approved by government agencies and the land within the lists accepted by People's Councils evaluation.