Scenario: A foreign investor eyes a coastal land plot in a central Vietnamese province for a resort project. The plot sits near an area zoned with defense implications. The broker says “sign the land lease first, sort out procedures later.” The investor asks counsel: how does the law regulate defense appraisal for projects near borders and islands, and what are the risks of signing in haste?
When does a project “touch” defense appraisal?
The Law on Investment No. 143/2025/QH15 (passed 11 December 2025, effective 1 March 2026, replacing the Law on Investment No. 61/2020/QH14) sets two main control gates. First, under Clause 9, Article 24, an investment project requesting the State to allocate land, lease land or permit land-use-purpose conversion, implemented in an area affecting national defense and security, requires in-principle investment approval; under Point a, Clause 3, Article 25, the approving authority is the Chairperson of the provincial People’s Committee. In other words, once the project site lies in an area determined to affect national defense and security and the investor requests land allocation or lease, the project must immediately pass the approval gate — regardless of capital scale.
Second, for capital contribution, share or contributed-capital purchases: under Point b, Clause 2, Article 21, a foreign investor contributing capital to or purchasing shares or capital contributions of a business organization must ensure national defense and security in accordance with the Law on Investment and relevant laws; and under Point c, Clause 3, Article 21, the foreign investor must complete registration procedures before changing members or shareholders where the business organization holds a land-use-right certificate for land on islands, in border-area communes, wards or special zones, coastal communes or wards, or other areas affecting national defense and security. Thus, even without a new project — merely acquiring a company holding island, border or coastal land — the foreign investor must still register. Many investors overlook this point.
What does defense appraisal cover?
At the level of legal principle — without speculating on state agencies’ internal procedures — defense appraisal means the authority competent to grant in-principle investment approval solicits opinions from relevant agencies, including opinions on national defense and security assurance conditions for the project. A practical example of this mechanism: on 13 October 2026, the Hanoi People’s Committee issued Decision No. 144/2026/QD-UBND on coordination rules among state management agencies for soliciting and providing opinions on national defense and security conditions for socio-economic development projects. Under these rules, opinions must be researched and assessed comprehensively, weighing socio-economic factors against strategic, long-term defense and security requirements; and licensing must be firmly refused where project implementation causes or risks harming national defense, national security or the environment — consistent with Clause 3, Article 35 of the Law on Investment 143/2025/QH15 and Point c, Clause 3, Article 65 of Decree No. 96/2026/ND-CP.
The key point for investors: an “area affecting national defense and security” is not for the investor to self-determine by feel (“coastal land is probably fine”). Determination rests with competent state agencies, based on land-use planning and defense, security and land regulations. Never sign a long-term land lease, place a large deposit or break ground before a clear conclusion on the project site is obtained.
Consequences of trying to bypass it
The law provides full sanctions. Under Clause 3, Article 5 of the Law on Investment 143/2025/QH15, an investor shall have its investment or business operations suspended, halted or terminated if they cause or risk causing harm to national defense or national security. More specifically, under Clause 3, Article 35, the Prime Minister decides to suspend or partially suspend an investment project where its implementation causes or risks causing harm to national defense, national security or the environment. A resort project into which tens of millions of dollars have been poured, then suspended on defense grounds, is a loss scenario no land-lease compensation clause can remedy.
Four things to do before committing money
First, check the site: review land-use planning, and ask the investment registration agency and the local military authority directly and in writing whether the plot falls in an area affecting national defense and security. Second, if it does, prepare a complete in-principle approval dossier, including the project’s defense and security assurance plan. Third, for acquisitions of companies holding island, border or coastal land: complete the capital-contribution/share-purchase registration under Point c, Clause 3, Article 21 before changing members or shareholders. Fourth, build the defense-appraisal outcome into deposit and land-lease contracts as a condition precedent or termination clause — so that if the project fails appraisal, the investor has a contractual exit instead of losing the deposit outright.
Frequently asked questions
Acquiring a Vietnamese company holding island land — is registration required?
Yes. Under Point c, Clause 3, Article 21 of the Law on Investment 143/2025/QH15, a foreign investor must complete registration for capital contribution, share or contributed-capital purchase before changing members or shareholders where the business organization holds a land-use-right certificate for islands, border areas, coastal areas or other areas affecting national defense and security.
How is an “area affecting national defense and security” determined?
Competent state agencies determine it based on planning, land-use plans and defense, security and land regulations. Investors should not self-assess; the correct approach is to ask the investment registration agency and the local military authority in writing before signing any transaction.
Does an ordinary coastal resort project face defense appraisal?
It depends on location. If the project requests State land allocation, land lease or land-use-purpose conversion in an area affecting national defense and security, it falls under Clause 9, Article 24 and requires in-principle investment approval. An ordinary land lease outside sensitive areas does not trigger this gate.
Can a defense-based refusal be appealed?
Administrative decisions on in-principle investment approval may be complained about or litigated under the complaints and administrative-procedure laws. However, assessing national defense and security risks is the state agencies’ professional prerogative; in practice, the chance of reversing a refusal on these grounds is very low. Prevention from the outset always beats cure afterwards.
