An investor eyeing a land parcel in Vietnam usually faces the question: should I join a land use right auction or an investor selection bidding for a land-using project? Both are competitive mechanisms for accessing land, yet the target land, selection criteria and obligations of the winner are entirely different. Choosing the wrong route from the start means preparing the wrong dossier and strategy — and losing the opportunity.
The legal framework: the 3-article sequence of the Land Law 2024
The Land Law 31/2024/QH15 (effective 01/8/2024) arranges three consecutive articles following the logic of land allocation and lease methods:
- Article 124 — cases of land allocation/lease without land use right auction and without investor selection bidding;
- Article 125 — land allocation/lease through land use right auction;
- Article 126 — land allocation/lease through investor selection bidding for land-using projects.
This sequence cannot be read in reverse: each article has its own objects and conditions.
Land use right auction vs investor selection bidding
| Criterion | Land use right auction (Article 125) | Investor selection bidding (Article 126) |
|---|---|---|
| Target land | “Clean land”: land already recovered with compensation, support and resettlement completed (or not subject to such); project area with connected transport infrastructure. Plus: included in the approved annual district land use plan; detailed 1/500 planning (for residential construction investment projects); an auction plan approved by the competent authority (clause 2 Article 125) | Land not yet cleared: projects subject to investor selection bidding under sectoral management law; land parcels on the list decided by the provincial People Council |
| Winner selection criteria | Price is the sole criterion: the highest bidder wins | Composite criteria: financial capacity, experience, investment plan, land use efficiency — not price alone |
| Advance funding for compensation, support, resettlement | None — the state has completed compensation, support and resettlement before the auction | The winning investor must advance funds for compensation, support and resettlement as required by the competent state authority |
| Governing law | Land Law 31/2024/QH15 (Article 125); Law on Property Auction (auction procedure framework) | Land Law 31/2024/QH15 (Article 126); Bidding Law 22/2023/QH15 (amended by Law 57/2024/QH15, Law 90/2025/QH15; cited per consolidated document 74/VBHN-VPQH 2026); Decree 274/2026/ND-CP on investor selection for land-using projects (issued 07/7/2026, effective 21/8/2026; replacing Decrees 23/2024, 115/2024, 225/2025) |
| Notable timeline | Depends on the approved auction plan | 36 months: within 36 months from the issuance of the decision recognizing the bidding result (or another contractual term), the competent-level People Committee must complete compensation, support and resettlement to allocate or lease the land (clause 8 Article 126) |
Quick decision guide for investors
- The parcel is already “clean” (recovered, compensation/support/resettlement completed, connected transport infrastructure, in the land use plan, approved auction plan) → join the land use right auction: prepare financial capacity to bid the highest price.
- The parcel is not yet cleared, the project is subject to investor selection bidding and the parcel is on the list decided by the provincial People Council → join the investor selection bidding: prepare a composite capability dossier and investment plan, and budget advance funding for compensation, support and resettlement.
- Cases under Article 124 → neither auction nor bidding: work directly through ordinary land allocation/lease procedures.
3 common investor mistakes
- Confusing investor selection bidding with contractor selection bidding: these are entirely different objects. Investor selection bidding (Article 126 Land Law; Decree 274/2026) selects the party to implement a land-using project; contractor selection bidding selects construction or supply units — contractor-selection instruments (such as Decrees 214/2025 and 349/2026) must not be cited in an investor selection matter.
- Assuming price decides investor selection bidding: unlike auctions (highest price wins), investor selection bidding is scored on composite criteria — financial capacity, experience, investment plan, land use efficiency. A high price with a weak plan can still lose.
- Overlooking the advance funding obligation for compensation, support and resettlement: the winning investor in investor selection bidding must advance funds for compensation, support and resettlement as required by the competent state authority. Failing to budget cash flow for this duty is a serious financial mistake, even though the 36-month milestone (clause 8 Article 126) places the duty to complete compensation, support and resettlement on the competent-level People Committee.
Note on document numbering: avoid confusion
- The current Land Law is 31/2024/QH15 — not “QH18”.
- The original Bidding Law is 22/2023/QH15 (amended by Law 57/2024/QH15 and Law 90/2025/QH15) — calling it the “57/2024 Bidding Law” is wrong.
- The current instrument on investor selection bidding is Decree 274/2026/ND-CP (effective 21/8/2026) — Decrees 23/2024, 115/2024 and 225/2025 have expired in this area.
Conclusion
Land use right auctions are for “clean land” with price as the sole criterion; investor selection bidding is for uncleared land with composite criteria and an advance funding duty for compensation, support and resettlement. Investors must correctly determine the legal status of the parcel, cross-check against Articles 124–126 of the Land Law 31/2024/QH15, and then choose the participation route and build a fitting dossier strategy. Choosing the right route from the start is half the victory.
Legal sources
- Land Law 31/2024/QH15 (effective 01/8/2024): Article 124; Article 125; Article 126.
- Bidding Law 22/2023/QH15, amended by Law 57/2024/QH15 and Law 90/2025/QH15 (cited per consolidated document 74/VBHN-VPQH 2026).
- Decree 274/2026/ND-CP on investor selection for land-using projects (issued 07/7/2026, effective 21/8/2026; replacing Decrees 23/2024/ND-CP, 115/2024/ND-CP, 225/2025/ND-CP).
- Law on Property Auction (issued 2016, as amended and supplemented) — auction procedure framework for land use rights.
Is your company targeting a land parcel for project investment in Vietnam? Reach us via the Contact page of FLAT Law Firm for an assessment of the appropriate land access route (auction or bidding), support in preparing participation dossiers, and negotiation of compensation, support and resettlement obligations.
The legal content of this article is reviewed by FLAT’s AI Legal Council and submitted to the owner for approval; it is not an opinion of a licensed lawyer and does not replace legal advice for specific cases.
For reference only, not legal advice.