Most manufacturing FDI projects in Vietnam locate their factories inside industrial parks (IPs) and sublease land from the IP infrastructure developer — rather than leasing directly from the State. This sublease contract determines the enterprise’s land use rights for decades, yet many investors sign without reviewing key legal points. This article sets out the current legal framework and a negotiation checklist under the law in force as of 15 October 2026.
1. Applicable legal framework
- Land Law 31/2024/QH15 (effective 1 August 2024) — Article 202 (industrial park and industrial cluster land), Article 172 (land use term), Articles 33 and 34 (rights and obligations of land users);
- Decree 35/2022/ND-CP (effective 15 July 2022, replacing Decree 82/2018/ND-CP) — management of industrial parks and economic zones.
2. The land sublease mechanism in industrial parks
Under Article 202 of Land Law 2024:
- Clause 2: The State leases land for projects developing and operating IP/industrial cluster infrastructure. The infrastructure developer is the direct land user vis-a-vis the State.
- Clause 3: A developer leasing land on annual payment terms may convert to lump-sum payment for the entire lease term. Correspondingly, the developer may sublease land: annually-leased portions on annual terms; lump-sum portions on lump-sum or annual terms. Land for shared infrastructure under the approved plan is exempt from land rental.
- Clause 5: Sublessees of infrastructure-attached land in IPs have the rights and obligations: lump-sum sublease → under Article 33 (as organizations allocated/leased land on lump-sum terms: transfer, sublease, mortgage, capital contribution with land use rights, etc.); annual sublease → under Article 34.
Note: under Points dd and e, Clause 1, Article 34, an FDI enterprise leasing land on annual payment terms may not sublease the land use rights (except the IP infrastructure developer itself) — it may only lease assets attached to the land, such as completed factory buildings.
3. Sublease term
Under Clause 4, Article 202, the land use term of an investment project inside an IP/industrial cluster follows the project’s operational term. Where the project’s operational term exceeds the IP’s remaining land use term, the developer must seek adjustment approval from the competent state authority, provided the total term does not exceed 70 years, with land use fees/rentals paid for the adjusted area.
Under Point c, Clause 1, Article 172, land allocation/lease terms for investment projects follow the project’s operational term but not exceeding 50 years (projects with operational terms over 50 years under the Investment Law: not exceeding 70 years). Upon expiry, users wishing to continue may apply for extension.
4. Checklist for negotiating the land sublease
4.1. Legal standing of the infrastructure developer
Request: the IP infrastructure project’s Investment Registration Certificate; the State’s land lease decision; the developer’s Land Use Rights Certificate; the approved 1/500 detailed construction plan. Sign only when the developer proves lawful subleasing rights.
4.2. Term and extension clauses
The sublease term must not exceed the FDI project’s operational term or the IP’s remaining land use term. Spell out extension conditions and procedures, and the developer’s responsibility for extending its own land lease with the State.
4.3. Payment form — it determines your rights
A lump-sum sublease confers the fullest bundle of rights (transfer, mortgage, capital contribution, sublease). An annual sublease is significantly restricted. Weigh cash flow against land-right value in negotiations.
4.4. Rent, infrastructure fees and adjustment mechanics
Clarify: land rental unit price; infrastructure usage, management and shared-service fees (power, water, wastewater treatment, security, sanitation); price review cycles and formulas; payment currency and exchange-rate clauses for foreign investors.
4.5. Site handover and infrastructure commitments
Handover schedule; site condition (levelled, with technical infrastructure to the boundary or not); the developer’s commitments on power, water, drainage connections and centralized wastewater treatment; penalties for late handover or substandard infrastructure.
4.6. Termination and compensation
Grounds for unilateral termination; damages for breach (especially where the developer’s breach vis-a-vis the State leads to land recovery); treatment of on-land assets upon termination.
4.7. Assignment of the sublease
Conditions for assigning sublease rights to third parties (usually requiring the developer’s consent); assignment procedures and costs.
4.8. Dispute resolution
Escalation: negotiation → mediation → arbitration or court. Foreign investors should consider arbitration clauses (domestic or international) and governing law.
5. Frequently asked questions
Can an FDI enterprise lease land directly from the State inside an IP?
As a rule, IP land is leased by the infrastructure developer from the State and then subleased. Secondary enterprises sign land sublease contracts with the developer under Article 202 of Land Law 2024.
Can annually-subleased land use rights be mortgaged?
Not as fully as lump-sum rights. Under Article 34, annual land lessees face restrictions on transfer, mortgage and capital contribution with land use rights — a point to weigh carefully in negotiations.
What is the maximum sublease term?
It follows the investment project’s operational term: up to 50 years (or 70 years for projects with operational terms over 50 years), and never beyond the IP’s remaining land use term.
This article was prepared by the FLAW AI Legal Council — the AI legal council of FLAT Law Firm, based on legislation in force as of 15 October 2026. It is general reference only and not legal advice for your specific case.
For support reviewing or negotiating IP land subleases, please contact FLAT Law Firm.
Article status: pending QA council review.