Vietnam issues decree amending and supplementing certain land regulations with effect from 20 May 2023

28 June 2023

On 3 April 2023, the Vietnam Government issued Decree No. 10/2023/ND-CP (“Decree 10”) which amends and supplements some articles of decrees guiding the implementation of Law on Land, namely Decree No. 148/2020/ND-CP (“Decree 148”), Decree No. 01/2017/ND-CP (“Decree 01”), Decree No. 43/2014/ND-CP (“Decree 43”), and Decree No. 44/2014/ND-CP (“Decree 44”). Decree 10 came into effect from 20 May 2023.

This article highlights some of the changes brought about by Decree 10.

Ownership certificate for tourism real estate

Decree 10 provides that ownership certificates can now be granted for the construction of tourism accommodation, such as condotels, on commercial and service land, if the project fully satisfies the conditions set out in relevant regulations (such as the Law on Land, Law on Construction, Law on Real Estate Business). This new provision is expected to address the legal bottlenecks for enterprises and individuals investing in condotels which have been existing for nearly a decade.

Extension of land use term upon project termination in case of force majeure events

The Law on Land, Decree 43 and Decree 01 provide that where an investor has obtained land from the State in the form of land allocation with levy payment, land lease with one-off rental payment for the entire lease term, or an annual rental payment, for the implementation of an investment project, but the investor, however, (i) does not put the land into use for 12 consecutive months, or (ii) the land use is 24 months behind the schedule stated in the project documents, the investor is entitled to have an extension of 24 months to put the land into use and may be subject to payment of additional land use fee / land rental for the delay period. Failure to put the land into use within the extension period would subject the project to possible revocation of the land use right and termination of the project due to violations under the Law on Land and Law on Investment. Upon the State’s issuance of a decision on termination of the project, the investor is still entitled to transfer the land use right and sell assets attached to the land to other investors who are entitled to develop a project on the land within 24 months from the date of the project termination decision. The State shall revoke the land use right and take over the assets attached to the land without any compensation if they have not been transferred after this 24-month period.

Decree 10 clarifies that:

  • If any delay in putting land into use is due to force majeure events, the 24-month extension term shall be extended to take into account the period of force majeure.
  • If any delay in transferring the land use right and selling the assets attached to the land upon the termination of the project is due to force majeure events, the 24-month transfer period shall be extended to take into account the period of force majeure.

Criteria of investors to participate in auction of land

Decree 10 introduces the following criteria for investors to be eligible to participate in an auction of land to obtain the right to be allocated or leased land from the State:

  • Investors must be subjects that are entitled to be allocated or leased land from the State according to the cases set out in Articles 55 and 56 of the Law on Land.
  • Parties with cross-ownership are not entitled to participate in an auction of one land lot or one project engaging multiple land lots. In such cases, only one of these parties is entitled to participate in the auction.
  • Investors have to pay a deposit of 20% of the starting auction price of the land.
  • Investors must not fall within the cases which are prohibited from participating in an auction according to the applicable laws such as the Law on Property Auction.
  • Investors must satisfy conditions prescribed under the Law on Residential Housing and Law on Real Estate Business in respect of residential housing projects or other real estate projects, for example, being established and licensed for real estate business under Vietnam laws, and having sufficient financial capability to implement the project.  

Land repurposing for implementation of investment projects

Decree 10 supplements Decree 43 to allow land used for rice farming, protected forests or “special use” forests to be repurposed for the implementation of investment projects upon satisfaction of certain criteria:

  • The project has had its in-principle investment policy approved or has been granted an investment registration certificate according to investment laws;
  • The project complies with the district-level land use master plan and is included in the approved district-level annual land use plan;
  • In respect of repurposing protected forests or “special use” forests land, there is in place a plan to replace forested land, or investors must pay for replacement forest planting as required by forestry laws;
  • In respect of repurposing land used for rice farming, there is in place a plan to use the surface land or investors must pay for land protection and development of rice farming land as required by cultivation law; and
  • Environmental impact assessments are conducted in accordance with the Law on Environmental Protection if required.

More