Vietnamlawmagazine

NGUYEN CONG THANH

Deputy Minister of Natural Resources and Environment

The 2003 Land Law and its guiding regulations provide more favorable conditions for investors, especially foreign investors, in the course of using land and conducting land-related transactions.

Foreign organizations and individuals that leas­e land and pay rents in a lump sum for the entire lease period have the rights to transfer the rights to use the leased land and own assets attached to the land during the lease period; sublease the land and own assets attached to the land during the lease period; mortgage the land and assets attached to the land at credit institutions licensed to operate in Vietnam during the lease period; and, contribute the rights to use the leased land and own assets attached to the land during the lease period in order to enter into production and business cooperation.

In case they are allowed to build homes for commercial purposes, they may sell or lease the homes according to Government regulations. The buyers of these houses will be granted land use right certificates according to the land law.

Foreign organizations and individuals that pay land rents on an annual basis have the rights to mortgage at credit institutions licensed to operate in Vietnam or contribute assets attached to the leased land; and sell assets attached to the leased land.

If the buyers are domestic organizations and individuals, they will be allocated the land or leased the land with annual rent payment. In case the buyers are foreign organizations and individuals, they will be leased the land with lump-sum rent payment for the whole lease period or annual rent payment at their request. The persons who are allocated or leased the land must continue to use it according to the pre-determined purpose in the remaining period.

They are also allowed to lease houses built for commercial purposes.

Foreign organizations and individuals that lease or sublease land in industrial parks, hi-tech zones or economic zones may sell, mortgage, pledge, or contribute own assets attached to the leased or subleased land, in case they pay land rents on an annual basis; transfer the rights to use the leased or subleased land and own assets attached to the land; mortgage the rights to use the leased or subleased land and own assets attached to the land at credit institutions licensed to operate in Vietnam; and contribute the rights to use the leased or subleased land and own assets attached to the land in order to enter into joint ventures with overseas Vietnamese, foreign organizations or individuals during the leasing or subleasing period, in case they pay land rents in a lump sum for the whole leasing or subleasing period.

Domestic or foreign-invested enterprises, when asking for the lease of land or change of the use purpose of the land or exercising the rights of land users must follow common procedures.

Documents and places of submission of documents and receipt of replies are determined under the one-stop-shop mechanism. The steps of settlement and the settlement time limits are attached to the responsibilities of each authority responsible for settling administrative procedures in land management and use; and administrative procedures are simple and easy to follow.

The land law also clearly stipulates acts of violation in the implementation of administrative procedures in land management and use and the liabilities of heads and officers of land management authorities at all levels and communal land survey officers who violate these regulations.

Land use by foreign investors

According to 2005 statistics, there were 35,068 ha used by foreign investors, including 14,060 ha (15.8%) used by joint ventures and 21,068 ha (59.3%) used by 100% foreign-invested enterprises. The land used by foreign investors was mainly concentrated in the region around Ho Chi Minh City, the northeast and the northern delta.

In the total area used by foreign investors, there were 20,920 ha of agricultural land, 13,961 ha of non-agricultural land and 186 ha of land already leased by the State but left unused. The reason for some unused area was that site clearance was not yet complete or that it was finished but the investors had not commenced building due to lack of investment capital.

Land use by foreign investors in 2005

Land use planning

To date, 63 provinces and cities have completed the schemes on adjustments to land use plans until 2010 and five-year land use plans for 2006-2010, of which 40 provinces and cities have obtained approvals from the Government.

At the district level, 441 out of 670 districts and cities belonging to the provinces have complet­ed their land use plans until 2010 (65.8%); 123 districts (18.4%) are in the planning process; and the remaining 106 districts (15.8%) have not yet implemented. Planning for the use of land in urban areas (urban districts and cities belonging to the provinces) has almost not been implemented.

At the communal level, 5,954 out of 10,777 communes, wards and townships have completed their land use plans until 2010 (55.2%); 1,746 communes (16.2%) are in the planning process; and the remaining 3,077 (28.6%) have not yet implemented. Of the communes which have made land use plans until 2010, 1,358 communes (12.6%) have made detailed land use plans indicated on land survey maps according to the Land Law.

In recent years, based on land use plans, the structure of land use has been suitably changed in line with the economic restructuring process and contributed to boosting socio- econom­ic development. The land for industrial development, services, infrastructure facilities and urban development has been widened to essentially meet the requirements of national industrialization and modernization, especially the land use demands of major foreign investment projects. Land use plans have become a basis for the allocation, recovery and lease of land as well as change of land use purposes for investment projects.

However, the publication of land use plans has not been good so access to information for easy lease of land from the State by enterprises in general and foreign-invested enterprises in particular, especially small- and medium-sized enterprises, remains problematic.

Limitations on investors’ rights

Under the land law, foreign investors can use land in two forms only: leasing with lump-sum rent payment or leasing with annual rent payment. Compared with domestic investors, foreign investors are not allowed to be allocated the land and pay levies for land use rights.

Foreign investors are not allowed to directly lease or receive the transfer of the rights to use land and receive the contributions from households and individuals. Foreign credit institutions are not allowed to receive the mortgage of land use rights and assets attached to the land in Vietnam. Foreign investors are not allowed to buy houses associated with land use rights in Vietnam.

Attracting foreign investment

(1) Continue to improve land use policies and law regarding land use planning, rights and duties of land users, and compensation, site clearance and resettlement when the Government recovers the land; change regulations on the rights of foreign investors when they use land in Vietnam, and the mortgage of land use rights and assets attached to the land in Vietnam at foreign credit institutions. Further renew administrative procedures in land recovery and site clearance in order to easily supply open land to investors; create a financial mechanism for the operation of land fund development organizations to readily supply open land to investors.

(2) Complete the system of estate registration and computerize it in order to improve administrative procedures for the people to monitor law enforcement, promote the battle against corruption, waste and bad acts in land management activities; publicize information on land use plans and land allocation and lease by the State as well as the calculation of compensation and support of relocation when the State recovers the land.

(3) Increase training to raise the professional qualifications and moral qualities of land management personnel, especially communal land survey staff.-