PwC

New Land Law issuedAmendments will impact foreign investors

• The new Land Law changes and adds in a number of

definitions. In particular, the term “foreign invested

enterprise” (“FIE”) is officially referred to as a land

user (rather than being generally referred to as

“foreign organisations and individuals” as

previously). FIEs are now defined as comprising:

100% foreign owned enterprises, joint venture

enterprises and Vietnamese enterprises in which

foreign investor(s) purchase shares, or with which it

merges or which it acquires. This clearer definition of

FIE corrects the previous inconsistency between land

laws and other laws, especially the Law on

Investment, and should remove some of the confusion

in implementation of land laws.

Law on Land No. 45/2013/QH13 (“new Land Law”) came into effect on 1 July. Some notable points include:

PwC Legal Vietnam NewsBrief

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. For further information, please contact: Phan Thi Thuy Duong or Veera Mäenpää (PwC Legal), Futoshi Funamoto (Japanese Business), Seong Ryong Cho (Korean Business), Bee Han Theng (Asian Chinese Business Services) at phone (84-8) 38230796, fax (84-8) 38251947 or contact Le Anh Tuan (PwC Legal) at phone (84-4) 39462246, fax (84-4) 39460705 in Ha Noi.

25 July 2014

• For land valuations, provincial People's Committees will no longer issue

annual land price lists. Instead, the central Government will issue a

land price range for each type of land every five years, and will adjust

this range if market prices change by more than 20%. Based on this

land price range, provincial People's Committees will issue land price

lists every five years, and determine specific land prices on a case by

case basis. Land pricing consultancy organisations may be involved in

such issuance and adjustment of land price ranges and land price lists if

so requested.

• The new Land Law clarifies the cases where FIEs can be allocated and

lease land. The State may allocate or lease land to FIEs via auction of

land use rights, e.g. for investment in construction of residential

housing for sale, lease or hire-purchase, or for investment in

construction of infrastructure for transfer or lease.

PwC

• In the past, FIEs could only lease land. Effective 1

July, FIEs investing in residential housing projects for

sale, or for sale in combination with leasing, can be

allocated land by the State in return for land use

fees. An FIE may also transfer all or part of a

residential housing project together with the

associated land use rights.

• Developers of industrial zones (“IZ”) or export

processing zones (“EPZ”) - including FIEs - which

pay upfront land rent to the State on a lump sum

basis for the whole lease term can sublease the land

for either an annual rent or an upfront lump sum. In

contrast, IZ/EPZ developers which pay land rent to

the State on an annual basis may only sublease land

on the same basis, i.e. for annual rental payment.

• Certain cases where exemptions from or reductions

of land use fees or land rent were allowed previously

have been withdrawn, including land in areas entitled

to investment incentives which is used for

construction of commercial residential housing, and

land used for the construction of public works for

business purposes.

• Circumstances, grounds and procedures for land withdrawal by the State and compensation are elaborated upon in the new Land Law. The authority to withdraw land is also clarified to reduce instances of arbitrary withdrawals.

On 15 May, the Government issued the following decrees to guide the implementation of the new Land Law:

Decree No. 43/2014/ND-CP detailing a number of articles of the Land Law;

Decree No. 44/2014/ND-CP on land pricing; Decree No. 45/2014/ND-CP on collection of land use fees; Decree No. 46/2014/ND-CP on collection of land rent and water surface

rent; Decree No. 47/2014/ND-CP on compensation, support, resettlement

upon land withdrawal by the State.

Please contact us if you have any questions.

PwC LegalVietnam NewsBrief

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. For further information, please contact: Phan Thi Thuy Duong or Veera Mäenpää (PwC Legal), Futoshi Funamoto (Japanese Business), Seong Ryong Cho (Korean Business), Bee Han Theng (Asian Chinese Business Services) at phone (84-8) 38230796, fax (84-8) 38251947 or contact Le Anh Tuan (PwC Legal) at phone (84-4) 39462246, fax (84-4) 39460705 in Ha Noi.

25 July 2014