Vietnam industrial park leasing rules for investors

Vietnam industrial park leasing means renting land, or a ready-built factory, from a company that runs a zoned industrial site. You sign a lease with that company, not with the state. Before you sign, check the land lease term, how rent is paid, and what the developer must supply.

This note is for foreign and local firms that plan a factory or warehouse. This is general information, not legal advice. For a real lease, have a Vietnamese lawyer who handles land and investment work read the contract first.

Who you lease from

An industrial park is a zone for making goods and for services that support making goods. It has set borders and its own rules. The Government manages parks under Decree 82/2018/ND-CP, issued on 22 May 2018. The decree took effect in July 2018 and covers industrial parks and economic zones.

Each park has an infrastructure developer. This is a company licensed to build the roads, power, water and drainage inside the park. The developer then leases land, or leases built factories, to tenants such as you. So your landlord is a business with duties under the decree.

The decree also sets up a management board for parks. The board handles licences and approvals for tenants in its area. Ask the developer which approvals the board handles, so you do not visit three offices when one will do.

Sources: Decree 82/2018/ND-CP of the Government, 22 May 2018, on the management of industrial parks and economic zones; Land Law No. 45/2013/QH13.

How land is leased

Under the Land Law 2013, the state owns all land. Users hold land use rights. A developer receives the right to use the park land, and it can then lease out plots to tenants inside the park.

The law lets the state lease land to an investor. It also lets the investor pay rent in two ways. One way is a single payment for the whole lease term. The other way is a payment every year. The choice changes your cash needs and your costs, so compare both before you decide.

Lease terms follow the investment project. For most projects, the land law sets a term of up to 50 years. For projects with slow capital return, or in areas with hard social and economic conditions, it can reach 70 years. Your lease cannot run longer than your project. Ask for the lease end date in writing and what happens when it ends.

Sources: Land Law No. 45/2013/QH13; Decree 82/2018/ND-CP.

Land lease or factory lease

You can usually choose between two kinds of space. The first is a bare plot, where you build your own plant. The second is a ready-built factory or warehouse, where the developer already built the shell.

A bare plot gives you control over the layout. It also takes time to design, get permits and build. A ready-built factory is faster, and rent is often paid month by month, but you have less say in the design.

Pick the option that fits your plan. A firm that must start production within months may prefer a built factory. A firm with heavy machines and a long plan may prefer its own plot.

Note one more point. If you lease a plot, check whether the developer has already paid the land fee for the whole park. This affects what rights the developer can pass on to you.

Sources: Decree 82/2018/ND-CP; Land Law No. 45/2013/QH13.

What to ask the developer

Use a short checklist before you sign. Write down every answer.

• Is the park's land lawfully allocated or leased to the developer, and for how long?
• Does the lease term match your project term?
• Is the rent paid once or every year? How is any rise set?
• What fees are charged apart from rent, such as management, water, power and waste treatment?
• Is power and water supply ready now, or only planned?
• Is there a central wastewater plant, and does your type of waste fit its permit?
• Which tasks does the park management board handle for you?
• Can you sublease or transfer the lease if your plans change?

Ask to see the licence that allows the developer to run the park. Ask for the park's approved plan too. A good developer will share these without fuss.

Sources: Decree 82/2018/ND-CP; Land Law No. 45/2013/QH13.

Costs and risks to compare

Do not compare parks by rent alone. Two parks with the same rent can cost very different amounts once you add service fees, road distance to the port, and the cost of getting workers to the site.

Make a simple table with one row per park. List rent, fees, distance to port or airport, power cost, and the date the services will be ready. Visit each park. Look at the roads, the drainage and who your neighbours are.

Check the contract for what happens if the developer is late with services, or if you must leave early. Get any promise in writing. A promise made in a meeting is hard to prove later.

Finally, remember that rules change. Keep a record of the date and the version of each document you rely on. Re-check the decree and your contract with a lawyer before you commit money.

Sources: Decree 82/2018/ND-CP; Land Law No. 45/2013/QH13.

Sources

• Government of Vietnam, Decree 82/2018/ND-CP of 22 May 2018 on the management of industrial parks and economic zones
• National Assembly of Vietnam, Land Law No. 45/2013/QH13