Renting land in an industrial park, what should businesses pay attention to?

Renting land in an industrial park is becoming a strategic choice for many businesses in Vietnam to optimize production and business activities. The process of leasing industrial park land requires businesses to master legal regulations and thoroughly evaluate infrastructure, finance and related factors. The article below will analyze in detail the legal and practical issues that businesses need to consider when renting land in an industrial park.

Understand clearly about industrial parks in Vietnam

Industrial parks in Vietnam are defined under the Law on Investment 2020 as areas with defined geographical boundaries, specializing in the production of industrial goods and providing services for industrial production. Industrial parks are areas with investment incentives. Currently, Vietnam has more than 320 industrial parks operating nationwide with a total area of ​​over 95,000 hectares, attracting thousands of domestic and foreign businesses.

Industrial parks in Vietnam are classified into many different types based on scale, field of activity and geographical location. Article 2 of Decree 35/2022/ND-CP regulates types of industrial parks including:

• Export processing zone;
• Supporting industrial park;
• Specialized industrial park;
• Eco-industrial park;
• High-tech industrial park;
• Expanded industrial park.

Each industrial park usually has an infrastructure investor – called an industrial park investor – who is responsible for constructing, operating and subleasing land that has been allocated by the State with land use fees or a one-time land lease. Domestic and foreign businesses can sign land lease contracts or rent factories in these zones to carry out production activities. Industrial parks usually have an operating period of no more than 70 years.

The process of renting land in an industrial park goes through many steps from choosing location, negotiating contracts to completing legal procedures and going into operation. Enterprises must clearly understand financial obligations such as land rent, infrastructure management fees, utility service fees and other contributions according to industrial park regulations.

Important considerations before renting land in an industrial park for businesses

Legally

Businesses need to carefully review legal documents related to industrial parks and land use rights. Land law specifically regulates the conditions, rights and obligations of businesses when renting land in an industrial park.

The land use term of investment projects in industrial parks and industrial clusters depends on the operating term of the investment project.

In case the operating term of the investment project is longer than the remaining land use term of the industrial park or industrial cluster, the investor must request permission from a competent state agency to adjust the land use term accordingly but the total land use term must not exceed 70 years and must pay land use fees or land rent for the land area whose use term is adjusted.

Enterprises that lease land will be granted a Certificate of land use rights according to the provisions of land law. In addition, Investment Licenses, Construction Licenses, Environmental Licenses and other licenses related to specific business lines also need to be carefully reviewed by businesses.

The sublessee of land attached to infrastructure in industrial parks and industrial clusters has the following rights and obligations:

• In case of subletting land with one-time rental payment for the entire lease period, you have the rights and obligations specified in Article 33 of the Land Law 2024;
• In case of subletting land with annual rental payment, you have the rights and obligations specified in Article 34 of the Land Law 2024.

Besides, the land lease contract is the most important legal document in the process of leasing industrial park land. This contract must clearly stipulate the rental area, rental term, rental price, payment method, rights and obligations of the parties, terms on contract liquidation and dispute resolution. Businesses should consult with legal experts before signing a contract to ensure long-term benefits.

Infrastructure and utilities

Infrastructure and utilities are factors that determine the performance of businesses in industrial parks. Businesses need to carefully evaluate the internal transportation system and connection to main roads, accessibility to seaports, airports and logistics centers.

Electricity supply, water, wastewater treatment, solid waste treatment and telecommunications systems need to fully meet the production needs of the enterprise. According to regulations, industrial parks must have a centralized wastewater treatment system that meets environmental standards and has a capacity appropriate to the scale of the industrial park. Many modern industrial parks also provide amenities such as wastewater treatment plants, transformer stations, centralized fire protection systems and 24/7 security systems.

Enterprises should check the actual quality of technical infrastructure systems through field surveys or consult with businesses operating in the industrial park. In particular, it is necessary to carefully consider the ability of the infrastructure to meet the current production scale and future expansion plans of the enterprise.

Financial issues

The cost of renting land in an industrial park includes many items that need to be carefully calculated by businesses. One-time or annual land rent, infrastructure management and maintenance fees, and costs for using utility services such as electricity, water, and wastewater treatment are the main expenses.

Investors who have been leased land by the State to invest in the construction and business of infrastructure of industrial parks and industrial clusters in the form of annual land rent payments are entitled to switch to the form of land lease with one-time payment for the entire lease period for all or part of the business land area.

For the land leased area with annual land rent payment, the investor has the right to sublease the land in the form of annual land rent payment; For the land leased area with one-time rental payment for the entire rental period, the investor has the right to sublease the land in the form of one-time land rental payment for the entire rental period or annual land rental payment; For the land area for infrastructure construction for common use in industrial parks and industrial clusters according to construction planning approved by competent authorities, the investor does not have to pay land rent.

The investor is responsible for reserving land funds for infrastructure investments to sublease to small and medium-sized enterprises and establishments relocated due to environmental pollution.

The State has a policy of reducing land sublease fees in industrial parks and industrial clusters for the cases specified in this Clause. The reduced land rent is returned to the investor through a deduction from the land rent that the investor must pay in accordance with the law on land rent collection.

Provincial People’s Committees, based on the actual situation in the locality, determine land funds for small and medium-sized enterprises and establishments relocated due to environmental pollution.

The land area to build worker accommodation in the industrial park according to planning is managed as commercial and service land and enjoys incentives according to the provisions of law.

Investment incentive policies such as exemption or reduction of land rent and corporate income tax are also financial factors businesses should consider. Enterprises need to carefully review the investment incentive policies of the locality where the industrial park is located to take full advantage of financial advantages.

Location and accessibility

The geographical location of an industrial park directly affects the operational efficiency and logistics costs of businesses. The distance from the industrial park to urban centers, seaports, airports and main traffic routes determines the cost of transporting raw materials and products.

Access to labor resources is a key factor for labor-intensive businesses. Industrial parks near residential areas or with a worker shuttle system will help businesses reduce recruitment and training costs. According to statistics, industrial parks in Vietnam have created jobs for about 4 million direct workers and millions of indirect workers.

Connections with supply partners and customers also need to be considered when choosing a land lease location. Enterprises should analyze their supply chain and choose industrial parks that create favorable conditions for linking with business partners. Industrial parks with the presence of many businesses in the same industry or related to the value chain will create a significant competitive advantage.

Long-term and expansion plans

Businesses need to consider the possibility of future expansion when renting land in an industrial park. The overall planning of the industrial park, reserve land area and terms on priority rights to lease adjacent land need to be clarified in the land lease contract.

The development strategy of the industrial park in the next 5-10 years also affects the long-term operations of the enterprise. Enterprises should learn about the industrial park’s plan to develop infrastructure, expand area and attract new industries to evaluate the compatibility with their development strategy.

The ability to transfer land lease rights or assets attached to leased land is an important factor in long-term planning. According to the provisions of Article 196 of the Land Law, enterprises have the right to transfer assets attached to leased land in industrial parks when they meet the prescribed conditions. Enterprises should carefully review the relevant provisions in land lease contracts to ensure flexibility in adjusting business strategies in the future.

Process of renting land in an industrial park

Required documents

Enterprises need to prepare complete documents according to regulations when carrying out land lease procedures in industrial parks. Basic profile includes:

• Written request for land lease or investment project proposal.
• Business registration certificate or Investment registration certificate (for foreign investors).
• Financial capacity profile: financial statements, capital confirmation, investment commitment.
• Investment project explanation: describe objectives, scale, land use needs, technology, environment…
• Proof of identity or legal entity: ID card/CCCD (for individuals) or business license (for organizations).
• Other documents depend on the specific requirements of each industrial park or type of investment.

The investment project is the most important document in the industrial park land lease file. The project needs to clearly show the objectives, investment scale, technology used, land use needs, labor and economic – technical indicators of the project. According to the provisions of the Law on Investment 2020, investment projects must be consistent with the planning of the industrial park and related industry planning.

Documents proving financial capacity such as financial statements, capital funding commitments from credit institutions or other documents also need to be carefully prepared by businesses. According to regulations, businesses must demonstrate the ability to mobilize capital to implement the project at least 20% of the total investment capital for projects with a capital scale of up to 300 billion VND, and not lower than 15% for projects with a capital scale of over 300 billion VND.

Implementation steps

The process of renting land in an industrial park goes through many steps with the participation of many authorities. Specifically includes the following steps:

Step 1: Survey and select a suitable industrial park

Investors need to determine the type of production, area needs, location, infrastructure, logistics, and preferential policies of industrial parks. Then, select an industrial park with industries suitable to the planning and qualified to receive projects.

Step 2: Work with infrastructure investors

Investors contact the investor of the industrial park to negotiate land lease conditions such as: area, rental price, lease term, infrastructure (electricity, water, wastewater treatment…), service costs and support commitments.

Step 3: Submit application for investment policy approval (If subject to policy approval application)

After determining a suitable location, the enterprise will carry out procedures to apply for investment policy approval or issue an Investment Registration Certificate (if required to carry out this procedure). According to the provisions of the Law on Investment 2020, the maximum time to process investment policy approval documents is 32 working days, and the time to issue an Investment Registration Certificate is 15 working days. The application will be sent to the Industrial Park Management Board or Provincial People’s Committee.

Step 4: Appraisal and issuance of Investment Registration Certificate

Authorities consider the feasibility, environmental impact and economic efficiency of the project. If all conditions are met, the investor will be granted an Investment Registration Certificate – an important legal basis for further implementation.

Step 5: Sign the land lease contract

After obtaining the Investment Registration Certificate, the enterprise signs a land lease contract with the industrial park infrastructure development company. Enterprises carry out procedures to apply for Construction Permits and other licenses related to business lines. The process of building a factory, installing machinery and equipment and putting the project into operation must comply with the regulations of the industrial park and relevant laws.

In the case of land managed and leased directly by the State, the contract is signed with a competent state agency.

Step 6: Fulfill financial obligations and register land

Investors fulfill financial obligations such as land rent, registration fees, infrastructure fees, etc. After that, they can register land use rights (if registration is required) to serve legal purposes for construction.

Enterprises also need to complete procedures to register ownership of construction works attached to leased land. According to the provisions of Decree 35/2022/ND-CP, enterprises using land in industrial parks are granted Certificates of land use rights, ownership of houses and other assets attached to land.

Step 7: Deploy project construction and operation

After completing the legal procedures, the investor begins to build the factory, install the technical system and operate it in accordance with the registered project content, ensuring compliance with the planning and regulations of the industrial park.

Consulting the procedure for renting land in an industrial park for businesses at Long Phan Consulting Company

Long Phan Consulting Company is a unit specializing in providing in-depth consulting services in the field of investment and business operations. With a team of experienced experts, Long Phan Consulting Company supports businesses in completing land leasing procedures in industrial parks quickly and effectively.

Long Phan’s consulting services include:

• Drafting and reviewing land lease contracts;
• Consulting on procedures, procedures and conditions for land lease;
• Business representatives work with competent authorities;
• Consulting on issues related to industrial park land lease;
• Support businesses in the negotiation process with infrastructure development companies.

Long Phan Consulting Company provides comprehensive solutions from the stage of document preparation until the business officially goes into operation in the industrial park.

Frequently asked questions

Below are questions and answers related to the procedure of renting land in an industrial park, please refer to:

What is the maximum land lease term in an industrial park?

The term of sublease of land in an industrial park will not exceed the remaining term of the investment project to build infrastructure of that industrial park.

Can businesses mortgage their leased land use rights in industrial parks?

Yes, businesses can mortgage the right to use leased land and assets attached to leased land at credit institutions licensed to operate in Vietnam.

When renting land in an industrial park, what fees do businesses have to pay?

In addition to land rent, businesses also have to pay fees such as infrastructure management fees, utility service fees (electricity, water, wastewater treatment), and other fees according to industrial park regulations.

What are corporate income tax incentives when renting land in industrial zones?

Depending on the investment area and industry, businesses can enjoy corporate income tax incentives such as preferential tax rates, tax exemptions and reductions for a certain period of time.

What do businesses need to pay attention to about the terms in land lease contracts?

Businesses need to pay special attention to the terms of lease term, rental price, payment method, rights and obligations of the parties, terms on contract liquidation and dispute resolution.

Can businesses transfer land lease rights in industrial zones?

Yes, businesses have the right to transfer land lease rights and assets attached to leased land when they meet all the conditions prescribed by law.

How is the wastewater treatment process in industrial parks regulated?

Industrial parks are required to have a centralized wastewater treatment system that meets environmental standards and has a capacity appropriate to the scale of the industrial park.

What documents do businesses need to prepare to rent land in industrial zones?

Documents include: Land lease request document, business registration certificate, financial capacity profile, investment project explanation and other documents as required.

Conclude

Renting land in an industrial park requires businesses to carefully consider many legal, financial and technical factors to ensure investment efficiency. Long Phan Consulting Company with in-depth expertise in land and investment law is ready to support customers throughout the entire process of leasing industrial park land. Please contact Long Phan Consulting Company immediately via the hotline 0906735386 to receive detailed advice and receive the most suitable solution for your business’s investment project.