Procedures for leasing industrial park land for FDI enterprises

Procedures for leasing industrial park land for FDI enterprises help create favorable conditions for foreign investors to access available land funds, complete infrastructure, and a stable legal environment. Thereby, FDI enterprises can quickly deploy production and business projects in Vietnam, saving time, costs and reducing legal risks, while contributing to promoting local economic development in a sustainable way.

Conditions for leasing industrial park land for FDI enterprises

Pursuant to the provisions of Point k, Clause 1, Article 28 of the Land Law 2024, Foreign Direct Investment (FDI enterprises) are leased land by the state.

FDI enterprises that want to lease industrial park land in Vietnam need to meet legal, financial and investment conditions according to regulations. Specifics often include:

1. Land lease rights of FDI enterprises

FDI enterprises are not allocated land by the State with land use fees, but can only rent land through a land lease contract with the Industrial Park Management Board or Industrial Park infrastructure development company.

Land leasing is only done for production and business investment purposes such as building factories, workshops, logistics facilities, offices, R&D,…

Land lease term: Maximum 50 – 70 years, depending on the type of project, investment scale and local development planning.

2. Have an Investment Registration Certificate

Before leasing land, FDI enterprises must be granted an Investment Registration Certificate (IRC) in Vietnam.

In the investment certificate, it is necessary to clearly state the purpose of land use, project scale, field of activity and land lease term.

Depending on the business model, an Enterprise Registration Certificate (ERC) may be required if establishing a company in Vietnam.

3. Investment project in accordance with industrial park planning

Projects of FDI enterprises need to be consistent with the industry orientation of the industrial park and the local socio-economic development planning.

Some industrial parks only accept specific fields such as: high technology, electronics, manufacturing, clean industry,…

Enterprises need to prove their financial capacity, experience and ability to implement projects through investment documents.

4. Carry out environmental impact assessment (EIA)

FDI enterprises must prepare an Environmental Impact Assessment Report (EIA) for production and construction projects that affect the environment.

The EIA report must be approved by a competent state agency before construction begins.

Businesses also need to commit to environmental protection measures, waste treatment, emissions and noise during operations.

5. Obtain approval from local authorities

FDI enterprises need to work and gain approval from the Provincial/City People’s Committee or Industrial Park Management Board on the following contents:

• Project goals and effectiveness
• Committed to contributing to the budget and local development
• Committed to creating jobs for workers in the area.

This is an important factor to create favorable conditions during project implementation.

6. Land lease agreement

After completing the above steps, the FDI enterprise will sign a land lease contract with the industrial park infrastructure investor.

The land lease contract must clearly state: leased area, location, rental price, term, financial obligations, conditions for transfer, sublease, or contract termination.

FDI enterprises can lease land directly from the State or sublease from industrial park investors, depending on the investment plan and business model.

Some additional notes:

• FDI enterprises need to prepare complete legal documents: representative passport, financial statements, capital commitment letter, project experience records, legal documents for consular legalization,…
• You should consult with legal experts or investment consulting companies to ensure the process is carried out legally.
• Each locality and each industrial park may have different detailed regulations, which should be carefully studied before implementation.

Procedures for leasing industrial park land for FDI enterprises

Procedures for leasing industrial park land for FDI enterprises must comply with the provisions of the Land Law 2024 and Decree 102/2024/ND-CP to ensure legal, stable land use rights and in accordance with investment goals.

According to Clause 2, Article 49 of Decree 102/2024/ND-CP, procedures for leasing industrial park land are carried out according to the following steps:

Step 1: Find a location and sign a deposit contract (temporary land holding)

Foreign investors proactively research, survey and select suitable land rental locations in industrial parks.

Sign a deposit contract or land lease principle contract with the industrial park infrastructure investor, usually requiring a deposit of 10 – 15% of the land lease value.

Purpose: Maintain land, preliminary agreement on main terms (rental price, area, rental period, obligations,…), and create time to prepare investment application documents.

Note: This stage has no legal value to establish official land use rights, it is only a placeholder step and project orientation.

Step 2: Apply for Investment Registration Certificate (IRC)

Submit application for Investment Registration Certificate (IRC) to the Department of Planning and Investment or Industrial Park Management Board (if authorized). IRC is a prerequisite to continue leasing land and implementing the project.

An application for an IRC usually includes:

• Document requesting implementation of investment project;
• Proposed investment project;
• Proof of investor’s financial capacity;
• Passport/ID of the individual investor or legal documents of the investment entity;
• Technology explanation (if the project is in a limited technology field);
• Document proving the right to use the location (deposit contract…).

Note: In some cases, it is necessary to carry out investment policy appraisal procedures before granting an IRC (for example: large-scale projects, using a lot of land, sensitive fields…).

>>> Reference: Procedures for applying for investment licenses in industrial parks.

Step 3: Establish a business (legal entity in Vietnam)

After having an IRC, foreign investors need to establish a foreign-invested enterprise in Vietnam through the procedure for applying for an Enterprise Registration Certificate (ERC).

This is the legal entity that will sign the official land lease contract and implement the project.

Step 4: Sign an official land lease contract with the industrial park

After having an IRC and legal entity, the FDI investor will sign an official land lease contract with the industrial park infrastructure investor.
Contract content includes: leased area, lease term (maximum 50 – 70 years), rental price, financial obligations, payment method, rights and obligations of the parties,…
Result: Investors are actually allocated land, paid according to progress, and have a basis to continue applying for construction permits, environmental impact assessments, and other legal procedures.

Step 5: Apply for a Certificate of Land Use Rights (LURC)

After signing the land lease contract, the infrastructure investor will coordinate with the FDI investor to carry out land change registration procedures to be granted a Land Use Rights Certificate (LURC) in the form of lease by a competent authority.

Land Use Rights Certificate is the legal basis for establishing land use rights for FDI enterprises, serving investment activities, construction and registration of assets on land.

Note: You can request payment in full or the remainder of the land rental value after being granted a Land Use Rights Certificate, depending on the contract agreement.

Step 6: Apply for a construction permit and deploy project construction

Investors do:

• Prepare an environmental impact assessment report (EIA) – if it belongs to the mandatory group (according to the Law on Environmental Protection).
• Apply for construction permits for factories, offices, production facilities and other documents depending on construction, production activities,…
• Carry out construction and installation of machinery and equipment.

After completion, the project will be accepted and put into operation according to the objectives registered in the Investment Certificate.

Strict compliance with these regulations not only helps businesses quickly put the project into operation but also ensures legality throughout the land lease period.

Important notes when renting industrial park land

When leasing industrial park land, FDI enterprises need to pay attention to a number of important issues to ensure compliance with legal regulations and minimize risks during the investment process.

• Land lease term: FDI enterprises can lease land for a maximum of 50-70 years, which can be extended according to legal regulations.
• Rights and obligations of businesses: Must use land for the right purpose, not illegally transfer, comply with environmental and construction conditions.
• Legal risks: It is necessary to carefully check the land lease contract to avoid disputes, especially the terms of rental price, transfer rights and contract termination conditions.

Understanding important notes when leasing industrial park land helps FDI enterprises ensure stable operations, comply with the law and limit legal risks.

Consulting service for leasing industrial park land for FDI enterprises at Long Phan Consulting Company

Long Phan Consulting Company specializes in providing consulting services and support for FDI enterprises in the process of leasing industrial park land in Vietnam. We commit to:

• Support in drafting and completing land lease documents in accordance with legal regulations.
• Consulting on procedures and negotiating land lease contracts with industrial park investors.
• Resolve arising problems and protect business interests when leasing land.
• An authorized representative submits documents and monitors the process of reviewing and supplementing documents.
• On behalf of the FDI enterprise, carry out all related procedures.

The above is one of the service items that we provide to you when carrying out procedures for leasing industrial park land for FDI enterprises. In addition, we will base on your needs and each specific case to come up with the most optimal and effective solution.

Some frequently asked questions about procedures for leasing industrial park land for FDI enterprises

To give you a clearer perspective on this issue, we provide some common questions about leasing industrial park land for FDI enterprises:

Which agency has the final authority to decide on leasing land to FDI enterprises in industrial parks?

Decision authority depends on the form of rental. If leasing land directly from the State, the Provincial People’s Committee (People’s Committee) is the agency that makes the land lease decision. If subleasing land from an investor developing industrial park infrastructure that has been leased by the State, deciding to approve the investment policy and signing a land sublease contract are key steps, the Industrial Park Management Board often plays a direct state management role in the industrial park.

In what method is industrial park land rent usually paid?

The payment method for land rent is very flexible and is agreed upon in the lease contract. FDI enterprises can choose to pay annually or make a one-time payment for the entire lease period according to the law and agreement with the lessor.

What are the procedures for extending the term of leased land in industrial parks?

When the land lease expires (usually within 6 months before the expiration date), if the FDI enterprise wishes to continue using and comply with land law, it needs to submit an application for extension to the natural resources and environment agency or the Industrial Park Management Board for consideration and submission to the Provincial People’s Committee for a decision on extension.

Are FDI enterprises allowed to sublease rented land in industrial parks?

The law allows FDI enterprises that are leased land by the State with one-time rental payment for the entire lease period to have the right to sublease land in the form of annual or one-time land rental payments, but must be consistent with the approved planning and land use purpose. If you pay annual land rent, you cannot sublease it.

Can FDI enterprises mortgage leased land use rights in industrial parks?

FDI enterprises renting land with one-time rental payment for the entire lease period have the right to mortgage their leased land use rights and assets attached to the land at credit institutions licensed to operate in Vietnam during the land lease term. In case of land lease with annual payment, this right is not available.

How are disputes related to industrial park land lease contracts resolved?

Disputes are mainly resolved through negotiation and conciliation between the parties. If unsuccessful, the dispute can be resolved at the Commercial Arbitration Center or a competent Court in Vietnam according to the agreement in the contract or legal regulations.

What specific environmental obligations do FDI enterprises need to comply with when leasing industrial park land?

In addition to complying with general regulations, FDI enterprises often have to prepare an Environmental Impact Assessment Report (EIA) or an Environmental Protection Plan depending on the scale and nature of the project; Apply for relevant environmental permits (if any); Construction and operation of waste treatment works (wastewater, exhaust gas, solid waste) to meet standards before discharge; and pay environmental protection fees according to regulations.

What does standard technical infrastructure in industrial parks usually include?

Standard industrial parks often provide synchronous infrastructure including: internal road system; Stable electricity and clean water supply system; storm water drainage system, wastewater and centralized wastewater treatment plant; telecommunications and internet systems; and sometimes there are additional amenities such as fire protection, trees, and support services.

If an FDI enterprise changes its goals or investment project scale, what should be done with the land lease contract?

When there is an adjustment to an investment project that leads to a change in land use needs (area, purpose), FDI enterprises must carry out procedures to adjust the Investment Registration Certificate and then amend and supplement the land lease contract as well as other related land procedures with competent state agencies or industrial park infrastructure investors.

In what cases can an industrial park land lease contract be terminated ahead of time?

The contract can be terminated ahead of schedule if the FDI enterprise seriously violates its obligations such as: using land for the wrong purpose, not implementing the project according to the committed schedule without a legitimate reason, being late in paying land rent for a long time, seriously violating environmental laws, or voluntarily returning the land. State recovery of land for national defense, security or socio-economic development purposes for national and public interests is also a reason.

Conclude

Leasing industrial park land for FDI enterprises requires careful preparation in terms of legal, financial and registration documents. To ensure the land leasing process takes place quickly, in accordance with regulations and limits risks, customers should carefully learn the procedures and seek support from a professional consulting unit. If you need legal advice or support, please contact Long Phan Consulting Company immediately via the hotline 0906735386 for detailed answers.