A Japanese investor leased eight hectares in an industrial park to build a components plant, yet after three years only the foundations and one small workshop stood completed because supply chains broke down and construction permitting dragged on. When the provincial inspection team concluded that the project was behind schedule and warned of land recovery, the board realised the real exposure was not a fine: the land could be taken back with no compensation at all, not even for the money already spent on levelling and infrastructure.
The legal framework: Clauses 8 and 9, Article 81 of the 2024 Land Law
The Land Law No. 31/2024/QH15, in force since 1 August 2024, sets out a two-step mechanism in Clause 8 of Article 81 for land allocated or leased by the State to implement an investment project. The first step is triggered when the land is left unused for twelve consecutive months, or when land use progress falls twenty-four months behind the schedule recorded in the investment project, counted from the date of on-site handover. At that point the investor may be granted an extension of no more than twenty-four months and must pay an additional amount equal to the land use levy or land rent for the entire period of delay.
The second step is far harsher: if the extension expires and the investor still has not put the land into use, the State recovers the land without compensating the land itself, the assets attached to it, or the outstanding investment costs sunk into it. Clause 3 of Article 101 of the 2024 Land Law restates that principle for recoveries carried out under Article 81. The single softening element is Clause 9 of Article 81: where the delay is directly caused by a force majeure event, the force majeure period is not counted into the period treated as non-use or delayed progress.
Applying the rules: investor rights live in procedure and evidence
An investor is not stripped of land overnight. Before Clause 8 of Article 81 can be applied, the competent authority must inspect the site, establish the actual state of land use and record the delay in official minutes. That inspection is precisely when the investor should table its full progress file: the investment registration certificate and its amendments, construction contracts, payment vouchers to contractors, acceptance records for each work item and a written explanation of the reasons for delay. Where the bottleneck sits with the State itself, for example late handover of cleared land or slow construction permitting, that file is the basis for asking that the waiting time be excluded from the delay calculation.
Two recovery families must be kept strictly apart. Recovery under Clause 8 of Article 81 for breach of the progress schedule belongs to the violation-based family, so no compensation arises under Clause 3 of Article 101. By contrast, where the State recovers land for national defence, security or socio-economic development in the national or public interest, the investor is compensated under the principles in Article 91 and the conditions in Article 95 of the 2024 Land Law. Article 172 separately caps the land use term of an investment project at fifty years in ordinary cases and seventy years for special projects; recovery for delay is an entirely different ground from expiry of the land use term, and companies confuse the two at their own cost when dealing with land authorities.
Action checklist on receiving a progress inspection notice
As soon as an inspection notice or a delay conclusion arrives, an FDI enterprise should work through the following steps in order to preserve as much of its position as possible:
- Compare the schedule in the investment registration certificate with actual progress item by item, and prepare a variance table giving a concrete reason for every period of slippage.
- Assemble force majeure evidence where it exists: lockdown orders, suspension decisions by competent authorities, records of natural disasters or epidemics, to support a request under Clause 9 of Article 81 of the 2024 Land Law.
- File early for an extension of up to twenty-four months with a credible revised schedule, and reserve funds for the additional payment corresponding to the delayed period under Clause 8 of Article 81.
- Refuse to sign inspection minutes that misrecord the facts; state reservations and list attached documents directly in the minutes at the meeting itself.
- Calendar the ninety-day complaint window under Article 9 of the Law on Complaints No. 02/2011/QH13 from receipt of the recovery decision, and in parallel prepare an administrative lawsuit under the Law on Administrative Procedures No. 93/2015/QH13.
Frequently Asked Questions
What rights does an investor have when land is recovered for delayed project progress?
The investor has the right to be notified and to take part in the progress inspection, the right to explain and submit evidence on the causes of delay, the right to request an extension of up to twenty-four months under Clause 8 of Article 81 of the 2024 Land Law, and the right to complain against or sue over the recovery decision if it is considered unlawful. In practice the most valuable right is proving that the delay came from force majeure or from the State side, because that decides whether the recovery ground arises at all.
What compensation is payable when land is recovered?
If land is recovered for delayed progress under Clause 8 of Article 81 of the 2024 Land Law, the investor receives no compensation for the land, for assets attached to the land or for outstanding investment costs, as Clause 3 of Article 101 confirms. Compensation under Articles 91 and 95 of the same law only applies where land is recovered for national defence, security or socio-economic development in the national or public interest. Everything therefore turns on the ground stated in the recovery decision.
If we disagree with the recovery, where do we complain or sue?
The investor first complains to the very person who issued the land recovery decision, within the ninety-day limitation period under Article 9 of the Law on Complaints No. 02/2011/QH13. If the complaint outcome is unsatisfactory, the investor may complain to the immediate superior level or file an administrative lawsuit at the competent people court under the Law on Administrative Procedures No. 93/2015/QH13. The two tracks must be planned together because their time limits run independently.
Can we request a schedule extension to avoid land recovery?
Yes. Clause 8 of Article 81 of the 2024 Land Law allows an extension of no more than twenty-four months where land has been unused for twelve consecutive months or progress is twenty-four months behind schedule, provided the investor pays an additional amount corresponding to the land use levy or land rent for the delay period. Companies should apply early, with a realistic committed schedule and proof of financial capacity, rather than waiting until a recovery decision is issued.
This article has been quality-reviewed by the FLAW AI Legal Council
