Reference situation:

A wholly foreign-invested company is operating in an industrial park. However, because of the expensive cost for factory rental, the company would like to build a factory outside the industrial park in land allocated or leased to by the State. The company would like to consult lawyers about the legal eligibility for doing so and the authority of the competent state agency.

Our legal advice:

1. Legal conditions for land allocation or land lease

Under Law on Land 2013, an investor, in case of requesting for land allocation or land lease, must be eligible for the following conditions:

a/ Having financial capacity to ensure the land use according to the investment project’s schedule. In particular, the investor must have (a) his own capital for implementation of the project equal to at least 20% of the total investment, for projects using less than 20 hectares of land; or to at least 15% of the total investment, for projects using 20 hectares of land or more; or the investor (b) can raise capital for implementation of the project from credit institutions, foreign bank branches and other organizations and individuals

b/ Paying a deposit under the investment law;

c/ Not violating the land law if they are implementing other projects on allocated or leased land. This violation is evidenced in (a) Land violation handling record in the projects in regions, which are recorded in departments of environment and natural resources; and (b) Public information about the land violations and the results of land violation handling, on the website of Ministry of Environment and Natural Resources and General Department of Land Administration, in respect of projects in other regions. 

Accordingly, the company should note the legal conditions, as shown above, to consider the possibility to receive the land from the State.

2. Authority to make a decision on investment policy

Article 32 Law on Investment 2014 provides the authority of provincial people’s committees to make a decision on investment policy as follows:

“1. Except for the projects subject to the authority of provincial people’s committees to make the decision on the investment policy in accordance with the law on public investment and the projects prescribed in articles 30 and 31 of this Law, provincial people’s committees shall make the decision on the investment policy in respect of the following projects: 
(a) Projects to which the State allocates or leases out land without auction, tendering or transfer; and projects with a requirement for conversion of the land use purpose;
(b) Projects using technology in the list of technologies the transfer of which is restricted in accordance with the law on technology transfer.

2. The investment projects which are prescribed in clause 1(a) of this article and implemented in an industrial zone, export processing zone, high-tech zone or economic zone in conformity with the master plan approved by the authority shall not be required to be submitted to the provincial people’s committee for its decision on the investment policy.”

According to the above regulation, the intended investment project of the company is subject to the decision on the investment policy of provincial people’s committees.

Please click here to refer to the procedures for the issuance of an Investment Registration Certificate.