No rule forces every FDI project into an industrial park, and no rule bans leasing land outside one. In practice, however, some projects can only sit outside a park because parks have no land fund or do not accept their sector; others take on needless risk by leasing outside. This article classifies projects by the nature of their site need, with the legal basis for each choice.
1. Projects that must lease outside industrial parks
Resource-tied projects: mining, large-scale hi-tech agriculture, forestry, aquaculture, solar and wind power, eco-tourism — the land must be where the resource is and cannot move into a park. For this group the lease is usually on annual payment, and agricultural, forestry, aquaculture and salt-making production projects additionally belong to the one-off payment group under clause 1 of Article 120 of the 2024 Land Law.
Projects needing plots larger than local park land funds: multi-stage integrated plants, regional logistics centres, tourism complexes — when no park has a plot that is large and contiguous enough, leasing outside is the only option, often via investor-selection bidding (Article 126) if land recovery is involved.
Projects refused by parks on sector grounds: high-pollution-risk sectors outside a park’s admitted sector list, or projects needing large safety distances (chemical or LPG storage) — the infrastructure developer may decline admission, and the investor must find off-park land and self-satisfy environmental and safety-distance conditions under sectoral law.
2. Projects that should not lease outside industrial parks
Small and mid-scale manufacturing needing fast start-up: the core value of a park is ready infrastructure (power, water, centralised wastewater treatment, fire protection) and a legally “clean” site. Off-park, the investor carries compensation and site clearance plus connection infrastructure itself — hidden costs usually exceed the rent differential, apart from the schedule risk under clause 8 of Article 81: land put into use 24 months behind the investment project schedule can be recovered after extension.
Cluster-dependent supply-chain projects: tier-1 and tier-2 suppliers of an assembler located in a park — siting the plant outside raises logistics cost and loses just-in-time delivery advantages without any offsetting benefit.
Projects planning a mid-term exit or financing: land leased directly from the State on annual payment carries restricted rights under Article 34 (no transfer, no capital contribution of the land use rights) — a structure that works against M&A or mortgage financing over the land use rights. Inside a park, although also a sublease, contracts with the infrastructure developer are usually more flexible on transferring assets attached to land; and where a one-off payment lease is available (Article 120), the investor should consider locations where that form applies.
3. A practical decision frame
Three filtering questions: (1) Will any park in the region accept the project’s sector and scale — if not, off-park is mandatory; (2) Does the project depend on an on-site resource or need more land than parks hold — if yes, off-park is rational; (3) If both answers are no — default to a park, unless the investor can prove the off-park option wins on total cost (rent + self-built infrastructure + time cost + clearance risk) over the whole project life under the Article 172 lease term. This decision should be locked before the investment policy approval stage, because the project location recorded in the investment document grounds the land file (Articles 116, 122).
Frequently asked questions
Must a logistics warehouse be located inside an industrial park?
No. A logistics warehouse may lease commercial and service land outside a park; only where the warehouse forms part of an industrial park or cluster’s infrastructure does the Article 202 framework apply. The deciding factors are transport connectivity needs and the locality’s warehousing planning, not a legal duty to enter a park.
A chemical plant refused by parks — is off-park leasing prohibited?
Not under land law, but the project must self-satisfy all sectoral conditions at the new site: environmental impact assessment, safety distance to residential areas, fire-protection design appraisal. The land use demand appraisal will cross-check these conditions in the lease dossier.
We lease off-park now; can we move into a park later?
Yes, by terminating the current project/land lease in due sequence (handling assets attached to land, completing financial obligations) and implementing a new or adjusted project at the in-park location. This is a project location change — the investment document must be adjusted first, then the land files at both ends are processed.
Do renewable energy projects get different land rent incentives off-park?
Land rent incentives attach to the investment incentive area and sector (Article 157 of the 2024 Land Law, Decree 103/2024/ND-CP), not to whether the site is inside or outside a park. Solar and wind projects in areas with difficult or especially difficult socio-economic conditions may enjoy land rent exemption or reduction under either siting option.
