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Official Gazette

Friday, May 27, 2022

How to build foreign-owned farms in Vietnam

Updated: 10:00’ - 02/01/2022
I am a foreigner residing in Vietnam and wish to buy a land area to build an agricultural farm, either on my own or in cooperation with a Vietnamese partner.

What procedures should I complete to buy land for building a farm in the country and, if I can find a local partner, what are legal grounds for effecting our farm-building cooperation?

First of all, it is affirmed that as foreign nationals are not mentioned in Article 169.1 of the 2013 Land Law which provides specific cases of acquisition of land use rights, you may not acquire land to build farms in Vietnam through transfer of land use rights from other individuals or organizations.

However, Article 133.1 of the 2013 Land Law regarding use of agricultural land by organizations, overseas Vietnamese and foreign-invested enterprises stipulates: “Economic organizations, overseas Vietnamese and foreign-invested enterprises that wish to use land for agricultural production, forestry, aquaculture or salt making may be considered for land lease by the State for implementation of their investment projects.” Hence, in order to build a farm in the country, you must establish a foreign-invested enterprise, either alone or with a local partner, so as to rent land for the purpose of implementing an investment project in the country.

In case you wish to join hands with a local partner, you two may enter into an investment cooperation agreement in either of the following forms:

(1) Investment in founding a Vietnam-based enterprise:

You and your partner may found a joint-stock company or limited liability company in accordance with the 2014 Enterprise Law and the 2020 Investment Law. You may establish a written agreement on capital contribution for founding an enterprise in Vietnam to implement your farm project.

Your future enterprise will be a foreign-invested enterprise, and as its owner, you may apply for land lease by the State for implementation of an agricultural project under Article 133.1 of the 2013 Land Law.

(2) Investment in the form of business cooperation contract (BBC):

If you or your partner has already acquired land use rights, you may cooperate with each other by entering into and implementing a BBC without having to establish a legal entity in Vietnam under Articles 27 and 28 of the 2020 Investment Law, specifically as follows:
  • If the BBC is entered into between domestic investors, it must comply with the civil law.
  • If the BBC is entered into between a domestic investor and a foreign investor or between foreign investors, the procedures for grant of an investment registration certificate must be carried out under Article 38 of the 2020 Investment Law.
  • Parties to the BBC have to set up a coordination board to perform the BBC. Functions, tasks and powers of the coordination board are agreed upon by these parties.
Such a BBC must have the following principal contents:
  • Names, addresses and competent representatives of the BBC parties; address of the transaction office or implementation location of the investment project;
  • Objectives and scope of business investment activities;
  • Contributions of the BBC parties and projected division of business investment results to the BBC parties;
  • BBC implementation schedule and duration;
  • Rights and obligations of the BBC parties;
  • BBC modification, transfer and termination; and,
  • Liability for BBC breaches and method(s) of dispute resolution.
In the course of BBC execution, the BBC parties may reach agreement on use of assets created through the business cooperation to establish an enterprise in accordance with the enterprise law.

The BBC parties may reach agreement on other matters not contrary to law.

With your BBC contract, you and your partner are required to carry out procedures for applying for an investment certificate at a competent agency.-
 

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