A hi-tech agriculture project (greenhouses, smart farms, seed centres, agro-processing) by a foreign investor has a rare legal advantage over industrial projects: it uses land for its proper agricultural purpose, so it mostly avoids the risky land use purpose conversion gate. But leasing agricultural land for a foreign-invested economic organisation still has its own channels and limits that industrial projects do not face. This article presents the land-access channels, rent policy and the works that may be built on farmland.
1. Two channels for leasing agricultural land for an FDI project
Channel one — leasing directly from the State: a foreign-invested economic organisation is a land user under Article 4 of the Land Law No. 31/2024/QH15 and may be leased land by the State (one-off or annual payment) for an agricultural production project, with the term following the project term and the law’s maximum frame. This channel applies where land sits in the State-managed fund or has been recovered and cleared. Channel two — agreement on land use rights with current users: under the mechanism in Article 127 of the 2024 Land Law on using land for socio-economic development projects via agreement on land use rights, the investor may lease/agree to use agricultural land of households, individuals and organisations in statutory cases and conditions (the project not being in the State-recovery scope, planning-compliant). A specific farmland limit: agricultural land accumulation is subject to caps on receiving agricultural LUR transfers (accumulation limits under Article 177 of the 2024 Land Law by land type and locality) — a large project must design its lease/accumulation structure within these caps, usually by State-leasing the core area and long-term agreement-leasing from households for the remainder, with a production-linkage model.
2. The advantage of keeping the purpose, and ancillary works on farmland
Because a hi-tech agriculture project uses land for its proper agricultural purpose, the investor need not complete purpose conversion under Article 121 for the cultivation area — the difference that materially shortens the land roadmap versus an industrial/commercial project on the same plot. Land law also permits certain works serving agricultural production directly on farmland under detailed rules (greenhouses, net houses, membrane houses, post-harvest preliminary processing and storage works within area limits and technical conditions in Decree No. 102/2024/ND-CP and local rules). The boundary to hold firmly: deep-processing plants of industrial scale, commercial cold stores serving goods outside the project, offices and expert housing on farmland are no longer “ancillary to agricultural production” — these items must sit on separately converted non-agricultural land, or in the project’s correspondingly approved functional zones. Site design should therefore split two layers from the start: the agricultural layer (purpose kept) and the non-agricultural layer (controlled conversion), instead of mixing them and being sanctioned for purpose misuse.
3. Land rent incentives and hi-tech agriculture policy
Agricultural projects sit in the incentivised and specially-incentivised field groups in the Land Law’s incentive system: Article 157 of the 2024 Land Law prescribes land rent exemption/reduction cases by investment field and locality — among which agricultural projects in difficult/extremely difficult socio-economic localities and projects in specially incentivised fields enjoy rent exemptions for corresponding periods under Decree No. 103/2024/ND-CP (including exemption during basic construction and a number of early operating years by group). Projects in a recognised hi-tech agricultural zone enjoy the zone’s additional policy mechanisms under hi-tech law and the zone establishment decision. Incentives do not apply automatically: the investor must identify the correct incentive group in the project file and land lease decision so the exemption/reduction mechanism is recorded before financial obligations arise — many projects lose early-year incentives merely because their land file did not record the correct incentive basis.
4. Specific risks: rice land, household linkage and terms
Three risks need dedicated management for farmland projects. First, rice land: if the project land fund includes rice land, any change of use (including ancillary works beyond the permitted scope) is tightly controlled under the rice-land protection regime; an agricultural project keeping rice or switching to other agricultural crops within the agricultural group must still follow rules on crop-structure conversion on rice land. Second, the household linkage model: when operating by leasing household land with production linkage, each household contract must be clear on term (matching project life), rent and rent adjustment, the enterprise’s right to build ancillary works on the leased land, and handling if the household demands the land back mid-term — a large contract count multiplies governance risk unless there is a standard contract form and a centralised resolution mechanism through local authorities/cooperatives. Third, terms: perennial-crop projects and greenhouse infrastructure have 20–30 year lives, while the component land layers have different caps and terms (State land leased per project, household land with its own use term) — the project file must tabulate each layer’s term with a matching extension plan, avoiding the state where infrastructure is still good but one layer’s land right has expired.
Frequently asked questions
May a foreign-invested economic organisation buy agricultural land use rights from households outright?
The project land-access mechanisms are mainly State leasing or agreement on land use rights under Article 127 of the 2024 Land Law in statutory cases and within farmland accumulation caps. An outright market-style purchase of household agricultural LUR by a foreign-invested organisation is not a pre-designed channel — the feasible structure is usually long-term leasing/agreed use with production linkage. Each structure needs diligence on the specific locality’s planning and caps.
Do greenhouses and preliminary-processing warehouses on farmland need purpose conversion?
Works serving agricultural production directly that fall in the permitted category under detailed farmland rules (within work-type, area and technical-condition limits) do not need purpose conversion. Beyond that list and those limits — especially solid industrial-scale works or works serving non-agricultural activities — corresponding non-agricultural land is required. Before designing, check the permitted ancillary-works list in the locality where the land sits.
How long is a hi-tech agriculture project exempt from land rent?
It depends on project group and locality under Article 157 of the 2024 Land Law and Decree No. 103/2024/ND-CP: common milestones include exemption during basic construction (up to the prescribed duration) and additional exemption for a number of early years for projects in incentivised/specially incentivised fields or difficult localities. The specific figure must be determined in each case’s project file preparation — there is no single “common exemption period” for all agricultural projects.
Can solid greenhouses be built on State-leased farmland with annual payment?
Building ancillary works serving agricultural production under farmland rules does not depend on the rent-payment form; but transaction rights over assets on the land differ: an annual-payment lessee may transact only in attached assets and the leasehold interest under Article 34 of the Land Law, and cannot mortgage/transfer the LUR. If the project needs land-asset-based financing, the one-off payment form is the choice to weigh from the start.
This article has been quality-reviewed by the FLAW AI Legal Council