[Scenario] FDI Company’s Land Lease Expires but the Factory Is Still New — What to Do?
The factory was built five years ago, the machinery is modern, orders run through 2030 — but the industrial-park land-use term expires in three months and the company forgot to file for extension. When an industrial-park land lease expires while the factory is still new: is there still a way out, and if not, where do tens of billions of dong in assets go? The scenario below is hypothetical and for illustration; the analysis follows Article 172 of the 2024 Land Law.
Contents
1. The hypothetical
Company B (a Korean-invested FDI enterprise) leases land inside Industrial Park Y from the State for an electronic-components project. The land-use term on its certificate runs until 31/12/2026. In 2021 the company invested VND 120 billion in a new factory and modern production lines, still about 90% new. Its investment project is licensed to operate until 2035. The company pays annual land rent in full, with no arrears. After a change in legal-department personnel, the company forgot to file the extension application — discovering this in late September 2026, past the statutory "no later than 6 months before expiry" filing point.
The scenario below is hypothetical and for illustration purposes.
Given facts:
- F1: Land-use term ends 31/12/2026; the 2021 factory is ~90% new and high-value.
- F2: The investment project is licensed to operate until 2035 (9 years beyond the land term).
- F3: The company missed the extension filing deadline (due 30/6/2026); the reason was an internal oversight after a personnel change.
- F4: Annual land rent fully paid, no arrears, no other violations.
2. Legal questions
- Q1: Can the company still extend after missing the filing deadline?
- Q2: Beyond extension, what options exist to keep using the land and factory?
- Q3: If no extension is granted, how are the factory and assets handled, and within what time?
3. Analysis
3.1 The framework: Article 172 of the 2024 Land Law
Article 172 on fixed-term land use alone decides this case:
- Clause 1(c): project land leases run with the project's operation term, capped at 50 years (projects licensed beyond 50 years under the Investment Law follow the project term, capped at 70 years). On expiry, users wishing to continue may be considered for extension — "considered" means nothing is automatic.
- Clause 3: extensions are processed in the final year of the term. Applications must be filed no later than 6 months before expiry. Late filers lose the extension, except in force-majeure cases. No extension → the competent authority recovers the land.
- Clause 4: without extension, the user must dispose of attached assets itself to return the site. Beyond 24 months from expiry without disposal → the State recovers the land with no compensation for land or attached assets; demolition costs (if enforced) fall on the asset owner.
Applied to F3: the filing deadline was 30/6/2026; it is now late September 2026 — nearly 3 months late. "Forgetting after a personnel change" is not force majeure as the law understands it (force majeure means unforeseeable, insurmountable objective events such as natural disasters or epidemics). Inference: the ordinary extension door is legally closed; everything after this is damage control with uncertain odds.
3.2 Option A: File immediately with a full explanation — do it even though the odds are low
What it involves: Prepare and file the extension application now, with a written explanation of the delay, evidence of good compliance (F4) and the project's remaining term (F2: operating until 2035, with jobs and budget contributions).
Legal basis: Clause 3, Article 172 — however late, filing is the precondition for the authority to "consider" the case. Not filing means certain loss; filing preserves a residual chance of discretionary consideration.
Strengths: low cost, preserves the status quo; if accepted, every problem disappears.
Risks: on the letter of the law — "late filers lose the extension, except in force majeure" — forgetfulness is unlikely to qualify. Recommendation: prepare Options B, C and D in parallel now; do not wait for Option A's outcome.
3.3 Option B: Use the project (valid to 2035) as the backbone of the land file
What it involves: Based on F2 (the project runs to 2035), put the full project dossier — the Investment Registration Certificate (IRC), project implementation reports, proof of nine more years of lawful operation — into the land-extension file. Key point: with the project term already running to 2035, no "project-term extension" is needed — the task is to use the project's existing legal standing to prove a genuine, lawful land-use need. Only pursue an investment-project amendment if other project content genuinely requires it (scale, capital, objectives…) — never amend merely to "beautify" the land file.
Legal basis: the land-lease term is tied to the project's operation term (point c, Clause 1, Article 172 of the 2024 Land Law; project terms under the 2020 Investment Law). Inference: this attacks the root — the State weighs land extension against the needs of a lawfully operating project; a project valid for nine more years is more persuasive than any explanatory letter.
Strengths: no unnecessary amendment procedure; the land file gains a clear legal backbone.
Risks: a valid project is necessary but not sufficient — the final land decision rests with the competent authority; land and investment procedures are independent and must be tracked in parallel.
3.4 Option C: Transfer the attached assets to another investor
What it involves: Sell the factory and machinery to another investor wanting into the park; the buyer then establishes a fresh land lease (or takes over the project) with a new term.
Legal basis: the land user's right to dispose of its owned assets attached to leased land; the transferee then establishes a new land relationship with the State or the infrastructure developer.
Strengths: recovers part of the VND 120 billion instead of a total write-off; the buyer may be a supply-chain partner.
Risks: distressed-timing sales fetch low prices; title transfer and the buyer's project procedures take time while the 24-month clock (Clause 4, Article 172) keeps running; the park management authority's cooperation is needed.
3.5 Option D: Proactively relocate within the 24-month window
What it involves: If all else fails, plan the dismantling, machinery relocation, factory liquidation and site return within 24 months from 01/01/2027.
Legal basis: Clause 4, Article 172 — the user must dispose of attached assets itself to return the site. Beyond 24 months → State recovery with no compensation for land or attached assets; enforced-demolition costs fall on the owner.
Strengths: controls costs proactively, maximises recovery of relocatable machinery, avoids enforcement.
Risks: the fixed factory structure is nearly a total loss; relocation and production-interruption costs are large. This is the last resort — but planning must start now, because 24 months passes quickly for a 300-worker plant.
3.6 Comparison
| Criterion | A (Late extension) | B (Project amendment) | C (Asset transfer) | D (24-month relocation) |
|---|---|---|---|---|
| Legal basis | Clause 3, Art. 172 | Art. 172 + Investment Law | Asset disposal rights | Clause 4, Art. 172 |
| Keeps production | High if approved | High | No (capital exit) | No |
| Speed | Fastest | Medium | Medium | 24 months |
| Main risk | Forgetfulness ≠ force majeure | Two independent procedures | Distressed pricing, racing the clock | Factory value lost |
| Priority | Do immediately | In parallel | Prepare | Mandatory contingency |
4. Conclusion and recommendations
Conclusion: on facts F1–F4, the company missed the extension filing deadline (Clause 3, Article 172) and "forgetting" does not constitute force majeure — the ordinary extension route is legally closed. The correct approach is parallel tracks: (A) file the extension now with the most persuasive explanation possible; (B) use the project dossier (valid to 2035) as the backbone of the land file — no project-term extension is needed; amend the investment project only if other content genuinely requires it; (C) prepare an asset-transfer option; (D) build the 24-month relocation plan as the mandatory contingency (Clause 4, Article 172).
Immediate next steps (this week):
- File the extension application now, with a detailed explanation plus proof of good compliance (F4) and the project's remaining term (F2).
- Assemble the project dossier (IRC valid to 2035) as the backbone of the land file; amend the investment project only if other content genuinely requires it.
- Commission an asset valuation for Option C.
- Build the 24-month timeline for Option D (from 01/01/2027) — even while pursuing A/B/C.
- Audit all other land and project documents company-wide so the "missed deadline" mistake never repeats.
This conclusion holds only on assumed facts F1–F4. Changing one fact (e.g., genuine force majeure, or lump-sum rent) could change the outcome. Real cases require counsel's assessment.
5. Variations
What if the company could prove force majeure? Clause 3, Article 172 then provides the exception — a late application could still be considered. But force majeure must be proved with objective evidence (blockade orders, natural disasters), not internal subjective reasons.
What if the project term also ends in 2026? Option B becomes meaningless — the focus shifts entirely to C and D, since there is no longer an operating project whose land needs the State could consider.
What about rent already paid for 2027? Rent prepaid for periods after the land-use expiry, where no extension is granted, may be reclaimed or offset under the rules — take it up with the tax/land authority.
Is your situation different? The land-use term and the project term are two different "clocks" — many FDI enterprises watch one and forget the other. Contact FLAT Law Firm — hotline 0988424851 — for a full audit of your company's land and project files.
References
- Land Law No. 31/2024/QH15 (effective 01/8/2024)
- Investment Law 2020 (project operation terms)