Industrial parks (IPs) are the most common "gateway" for FDI capital into Vietnam — bringing together ready infrastructure, centralised procedures and a community of same-industry enterprises. But behind the convenience lies a multi-layered legal framework: land, investment, construction, environment, fire safety, tax. This handbook covers the full legal journey of industrial park real estate for foreign investors — from choosing an entry model to long-term operation. For the broader picture, see real estate, construction and projects.
Table of contents
- 1. Three entry models: which to choose?
- 2. The land legal framework in industrial parks
- 3. Investment procedures: IRC, ERC and licences
- 4. Construction, environment, fire safety
- 5. Tax and investment incentives
- 6. Lease contracts: the decisive clauses
- 7. Seven common mistakes to avoid
- 8. Frequently asked questions
- 9. Suggested action roadmap
1. Three entry models: which to choose?
Model 1 — Leasing a ready-built factory. Fastest: sign a construction-works lease (industrial function) with the infrastructure developer or a factory-owning enterprise; production possible after a few months of preparation. Suitable: market exploration phase, production not requiring bespoke factories, need for fast operation. Note: check the lessor's legal standing and the contract terms carefully — this model generates the most contract disputes.
Model 2 — Leasing land to self-build a factory. Full control over design, function and expansion. Suitable: specialised production (cleanrooms, heavy loads, proprietary treatment systems), 20–50 year plans. Requires: more capital, handling all construction, environmental and fire safety procedures, and a strategic decision on the land rental payment form (lump-sum/annual).
Model 3 — M&A: taking over a project or project company. Fast takeover of an operating facility, inheriting licences and markets. Suitable: rapid expansion, acquiring a competitor or partner. Requires: comprehensive legal due diligence — land, licences, tax debts, disputes, labour — before closing.
There is no absolutely "best" model — only the model that best fits each investor's capital strategy, timeline and risk appetite.
2. The land legal framework in industrial parks
The Land Law No. 31/2024/QH15 (effective 1 August 2024) dedicates Article 202 to land in industrial parks, industrial clusters and hi-tech parks:
Term: the land use term for projects in industrial parks follows the project's operation term. Combined with Point c, Clause 1, Article 172: ordinary projects no more than 50 years; projects with an operation term over 50 years follow the project term but no more than 70 years. Extending beyond the industrial park's remaining operation term requires permission from the competent state authority.
Land rental payment form — determines the enterprise's "bundle of rights":
- An infrastructure developer leasing land on annual payment may switch to lump-sum payment for all or part of the area (Clause 1, Article 202) — a new mechanism of the 2024 Land Law.
- The "mirror" principle in subleasing (Clause 3, Article 202): land for which the infrastructure developer pays annually may only be subleased annually; land paid lump-sum may be subleased lump-sum or annually.
- Consequence: an enterprise leasing land on lump-sum payment has the full rights (transfer, mortgage, capital contribution with land use rights); annual payment limits these rights.
The practical difference can be summarised:
| Payment form | Transfer | Mortgage | Capital contribution with land use rights | Sublease |
|---|---|---|---|---|
| Lump-sum | Yes | Yes | Yes | Yes |
| Annual | No | No | No | Yes |
This is why the payment-form decision is a capital-structure decision, not just a cash-flow one: it determines whether the land use right can later serve as collateral for Vietnamese bank financing or be contributed into a joint venture.
Forms of receiving land use rights for foreign-invested economic organisations are set out in Article 28 of the 2024 Land Law with 5 forms — not limited to land lease as many investors assume:
- Receiving transferred land use rights in industrial parks, industrial clusters and hi-tech parks;
- Receiving transferred investment capital that is the value of land use rights;
- Receiving capital contribution with land use rights;
- Being allocated land by the State to implement housing construction investment projects;
- Being leased land by the State (lump-sum rental for the whole lease term or annual rental).
In industrial park practice, the most common form remains subleasing land from the infrastructure developer (Clause 3, Article 202), but FDI enterprises should know all five forms to choose the right structure — for example, project M&A transactions usually attach to form 1 or 2, while form 3 suits a joint venture where the Vietnamese partner contributes land.
Extension: on expiry, land users in need may be considered by the State for extension (Clause 3, Article 172); done in the final year of the term, with the application filed no later than 6 months before expiry (Article 64, Decree 102/2024/ND-CP). Because the land term is tied to the project term, the investment project must be extended in parallel.
3. Investment procedures: IRC, ERC and licences
The procedure framework under the Law on Investment No. 143/2025/QH15 (effective 1 March 2026, replacing the Law on Investment 61/2020/QH14):
- Investment policy approval (where the project is subject to approval) — determine from the start to avoid a wrong sequence. Large-scale or sensitive-sector projects typically fall in this category; getting the classification right at the outset saves months of rework.
- Investment Registration Certificate (IRC) — recording the project's objectives, scale, location, schedule and investment incentives (if any). The IRC is the anchor document: land leases, construction permits and incentive applications all reference it.
- Enterprise Registration Certificate (ERC) — establishing the Vietnamese legal entity implementing the project. The ERC's registered business lines must cover the planned production activities, because operating outside registered lines creates separate compliance exposure.
- Land/factory lease contract in the industrial park with the infrastructure developer. Negotiate this in parallel with the IRC/ERC track, not after — the lease's commercial terms (price, term, payment form) feed back into the project's registered investment capital.
- Construction permit (where self-building a factory) and sector licences by business line (registering business lines for FDI companies needs market-access condition cross-checking). Conditional business lines — common in manufacturing with environmental or safety dimensions — require the sector licence before operation, not just before construction.
- Work permits for foreign managers and specialists. Start early: the work permit process interacts with visa and temporary residence procedures, and key personnel cannot legally work while applications are pending.
For step-by-step detail, see the FDI company setup roadmap in Vietnam. The golden rule: build an overall timeline tying the legal schedule to the land lease, construction and production plans — many projects run late because the procedure streams run separately, uncoordinated.
4. Construction, environment, fire safety
Construction: self-built factories need a construction permit, construction per the approved design, and acceptance for use as prescribed. For leased ready-built factories, check the lessor's as-built and acceptance files.
Environment: carry out environmental review before FDI project implementation — environmental impact assessment files or environmental permits under the Law on Environmental Protection 72/2020/QH14. High-pollution-risk industries (dyeing, plating, chemicals, food processing…) face stricter wastewater and emission treatment requirements — and industrial parks also have internal rules on admitted industries.
Fire safety: the Law on Fire Prevention, Firefighting and Rescue No. 55/2024/QH15 effective 1 July 2025. Industrial factories are under strict management: fire safety design appraisal and fire safety acceptance before operation. Fire safety costs and timelines must be built into the project plan from the start — this is the most underestimated item.
5. Tax and investment incentives
Investment incentives: the framework in the Law on Investment 143/2025/QH15 and Decree 96/2026/ND-CP (the investment incentive articles) — corporate income tax incentives, land rental and land use fee exemptions/reductions. Eligibility attaches to business lines, location, capital scale and technology. Note on procedure (Article 24, Decree 96/2026/ND-CP): not every incentive is "recorded in the IRC" — some are recorded in the approval decision/IRC (Clauses 1–2), but in other cases the investor self-assesses the conditions and completes procedures at the applying authority (Clause 4). Do not assume every project in an industrial park is incentivised equally.
Operating tax compliance: tax compliance for FDI enterprises — CIT, VAT, contractor tax (for machinery and service contracts from abroad), transfer pricing (for cross-border related-party transactions). Prepare transfer pricing documentation from the first year of operation rather than when inspected.
6. Lease contracts: the decisive clauses
Whether leasing land or a factory, these clauses decide the project's fate for 20–50 years:
- Subject and boundaries: precise description of area, location and accompanying assets; handover minutes on current condition. Ambiguity here is the seed of boundary and shared-infrastructure disputes years later — attach a surveyed plot map as a contract appendix.
- Term and extension: tied to the remaining land use term and the project term; priority extension rights, the mechanism for setting new rental prices. A lease term that outlives the underlying land use right is unenforceable for the excess period, so verify the park's remaining term first.
- Rental price and adjustment: a clear adjustment formula with a cap — avoid clauses letting the lessor adjust unilaterally without limit. Index-linked adjustments (for example, tied to a published price index) with a ceiling protect both sides from arbitrary repricing.
- Sublease, transfer: conditions for assigning the contract in restructurings or M&A. Without an assignment clause, a future share deal or asset deal may require the lessor's fresh consent on unknown terms.
- Early termination: cases of unilateral termination, early-termination penalties, handling of land-attached assets at the end. Spell out who owns the factory building if the lease ends early — this is the clause most often missing and most often litigated.
- Infrastructure developer's commitments: industrial park infrastructure completion schedule, service quality (power, water, wastewater treatment), sanctions for breach. A factory cannot operate on promises: tie service-level commitments to liquidated remedies.
7. Seven common mistakes to avoid
- Signing leases without checking the park's legal standing: not verifying the infrastructure developer's capacity, the land's legal status, the land rental payment form of the exact leased parcel. A developer with only annual-payment land cannot give you lump-sum rights no matter what the draft contract says.
- Term confusion: the contract lease term exceeding the industrial park's remaining land use term or the project term. The excess years are simply unenforceable — and renegotiation at that point happens from a position of weakness.
- Underestimating environment and fire safety: discovering only after construction that acceptance fails, requiring costly remediation. Fire safety design appraisal under the 2024 Fire Safety Law should run in parallel with architectural design, not after it.
- Not putting incentives into the IRC: losing incentive eligibility by not completing the recording procedure correctly. Where Article 24 of Decree 96/2026 requires recording in the decision/IRC, self-application is not a fallback — follow the correct track from the start.
- Thin lease contracts: missing extension, price adjustment and early termination clauses — disputes erupt after 5–10 years of operation. The contract you sign today must still work when management, market conditions and the lessor's ownership have all changed.
- Ignoring transfer pricing and contractor tax: back taxes and penalties on tax inspection. Related-party equipment purchases and management fees are the first items tax authorities examine in FDI manufacturing audits.
- No overall timeline: the procedure streams (investment, land, construction, environment) running separately, the project months behind plan (practical experience commonly records 6–12 month delays for poorly prepared projects). Assign one owner for the master timeline — diffusion of responsibility is the usual cause.
8. Frequently asked questions
What entry models do FDI investors have into industrial parks?
Three main models: (1) leasing a ready-built factory — fastest, fewest procedures; (2) leasing land in the industrial park to self-build a factory — design control, suitable for specialised production and long-term plans; (3) taking over an operating project/project company in the park (M&A) — fast takeover but requiring comprehensive legal due diligence.
What is the maximum land use term in industrial parks?
Under Article 202 of the 2024 Land Law, the land use term for projects in industrial parks follows the project's operation term. Ordinary projects no more than 50 years; projects with an operation term over 50 years follow the project term but no more than 70 years (Point c, Clause 1, Article 172).
How do lump-sum and annual land rental payments differ in rights?
Lump-sum payment gives the full "bundle of rights": transfer, mortgage, capital contribution with land use rights. Annual payment limits these rights. Under Clause 3, Article 202, a subleasing enterprise is further limited by the infrastructure developer's own payment form on that land.
What licences does an FDI investor entering an industrial park need?
Investment policy approval (where required) and the IRC under the Law on Investment 143/2025/QH15 (effective 1/3/2026); the ERC; a land/factory lease contract; a construction permit (where self-building); environmental files; fire safety acceptance under the Fire Safety Law 55/2024/QH15 (effective 1/7/2025); work permits for foreigners.
Do projects in industrial parks get investment incentives?
Possibly. The framework is in the Law on Investment 143/2025/QH15 and Decree 96/2026/ND-CP. Eligibility attaches to business lines, location, capital scale and technology — not every project is incentivised equally. On procedure (Article 24, Decree 96/2026/ND-CP): some incentives are recorded in the decision/IRC, but in other cases the investor self-assesses the conditions and completes procedures at the applying authority.
What is the most common mistake of FDI investors entering industrial parks?
Signing land/factory leases before thoroughly checking legal standing: not verifying the infrastructure developer's land rental payment form, not cross-checking the remaining land use term, not assessing the environmental/fire safety requirements of the production industry.
9. Suggested action roadmap
Note: the roadmap below is a practical experience estimate of real implementation, not a statutory time limit — actual timing depends on locality, industry, project scale, file preparation, counsel coordination and local practice.
- [ ] Months 1–2: survey industrial parks, choose the entry model; preliminary legal check of the park and infrastructure developer; start investment procedures (IRC).
- [ ] Months 2–4: negotiate the lease contract (land/factory) in parallel with completing the IRC and ERC; determine the land rental payment form.
- [ ] Months 3–6: complete environmental files, fire safety design, construction permit (where self-building).
- [ ] Months 6–12: construction, acceptance, factory operation; complete work permits and tax registration.
- [ ] Operation: comply with periodic investment reporting, tax and environmental obligations; track land and project terms for timely extension.
Contact FLAT — hotline 0988424851 for full-process legal accompaniment: from choosing the industrial park and negotiating the lease to completing every licence for factory operation.
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References
- Land Law No. 31/2024/QH15
- Law on Investment No. 143/2025/QH15
- Decree No. 96/2026/ND-CP guiding the Law on Investment
- Law on Real Estate Business No. 29/2023/QH15
- Law on Fire Prevention, Firefighting and Rescue No. 55/2024/QH15
- Law on Environmental Protection No. 72/2020/QH14