An FDI project’s land lease term is not a default number: it is “tailored” to the investment project’s operating term and recorded directly in the land lease decision. Understanding how this term milestone is determined, recorded and disciplined helps investors avoid two extremes — requesting a term shorter than the assets’ life, or requesting long but failing schedule discipline and facing recovery. This article presents the mechanism under Articles 172 and 81 of the Land Law No. 31/2024/QH15.
1. The lease term follows the project term: the 50/70-year frame
Article 172(1) of the 2024 Land Law sets the principle: the land allocation/lease term for an organisation implementing an investment project is considered and decided on the basis of the project’s operating term — maximum 50 years; for projects in difficult/extremely difficult socio-economic localities, large-capital slow-payback projects and other statutory special cases, the term may be longer but not over 70 years; land leased to diplomatic representations is capped at 99 years. The “project operating term” comes from the investment documents (policy approval decision/investment registration certificate), in which the phased implementation schedule is a mandatory content. Design consequence: the lease term cannot exceed the project term in force — a project certified for 40 years will not receive a 50-year lease decision; investors wanting a long lease frame must start by requesting a sufficiently long project term in the investment file, with asset-life and payback arguments to match (heavy industry, energy infrastructure, perennial-crop agriculture are typical files considered for long frames).
2. How it is stated in the lease decision, and the term’s start point
In the land lease decision, the term is recorded as a specific clause comprising: the total lease years, the start date (which is the decision’s issuance date — because the lease term runs from the date of the lease decision under Article 172), and hence a determinable expiry date. Some decisions also record conditions on phased land-use commencement per the project schedule and cross-refer to the operating term and schedule in the investment certificate — forming a “double lock”: the land expires on the decision’s calendar, but continued use throughout that calendar depends on the project still existing and the land being used on schedule. When the project operating term is adjusted (increased or decreased), the land file must adjust correspondingly: an adjustment lease decision, contract annex and certificate reissuance — the certificate records the land use term per the current decision. Investors should keep one unified “land calendar”: decision date, expiry date, extension milestone (file at least six months before expiry under Article 172(2)) and the schedule commitments in the investment documents.
3. Schedule discipline: how unused or behind-schedule land is handled
A long term comes with hard schedule discipline in Article 81 of the 2024 Land Law: land allocated/leased but unused for 12 consecutive months from hand-over, or used 24 months behind the schedule recorded in the investment project, falls in State recovery cases. The only “soft brake”: the land user may be extended for a maximum of 24 months and must pay the State an amount corresponding to land use fee/rent for the delay period; if the extension lapses without the land being put to use, the State recovers the land without compensation for land and attached assets (save force majeure). For FDI projects, this turns the “schedule in the investment certificate” into a commitment with teeth: writing an over-ambitious schedule in the investment file to win appraisal returns as a land recovery milestone; writing an over-cautious schedule weakens land competitiveness. The right balance is a schedule with buffers for steps outside the investor’s control (site clearance, infrastructure connection) and third-party-dependent milestones recorded clearly in the project file.
4. When the project ends early or outlives the lease term
Two end-of-life scenarios must be anticipated in the lease file. Scenario one — the project ceases operation before the lease term ends: the LUR is handled under investment and land law (project transfer to a party continuing the same purpose, keeping the remaining term; or returning the land to the State where no successor exists) — assets on land are handled per Article 172(2) principles for non-extension cases: the land user disposes of assets within the statutory window, after which the State recovers without compensation. Scenario two — the project needs to operate beyond the recorded lease term: the route is extending the project term in the investment documents first, then applying for lease extension with the file submitted at least six months before expiry; extension is considered on the basis of continued planning conformity and the investor’s proper performance of obligations throughout the lease. Both scenarios show one invariant principle: an FDI project’s land lease term lives and dies with the investment project’s legal life cycle — land governance is therefore part of project life-cycle governance, not a task for the final year before expiry.
Frequently asked questions
Can a 70-year lease be requested for an ordinary factory?
The above-50 up to 70-year frame applies only to cases listed in Article 172(1) of the 2024 Land Law: projects in difficult/extremely difficult socio-economic localities, large-capital slow-payback projects and other statutory cases — and the project operating term in the investment documents must correspond. A factory in an ordinary locality with a 50-year certified project has a maximum 50-year land lease term; wanting longer requires proving special-group membership from the investment file onward.
If the project is 18 months behind the certificate schedule, is the land recovered immediately?
The Article 81 discipline milestones are land use 24 months behind the investment project schedule (or 12 consecutive months unused from hand-over). Eighteen months behind has not hit the recovery milestone but is a red warning zone: investors should proactively adjust the project schedule in the investment documents where objective reasons exist, and prepare the maximum 24-month use extension with the corresponding payment for the delay period, rather than silently reaching the 24-month mark.
On project transfer to another investor, does the land lease term restart?
No. The project transferee inherits the remaining lease term under the current lease decision (and the project term as adjusted into the transferee’s name under investment law) — the term clock does not restart. This is why transfer diligence must calculate precisely the remaining land term against the transferee’s intended exploitation plan and asset life.
What conditions apply to extending a lease near expiry?
Under Article 172(2) of the 2024 Land Law, at term end a land user wishing to continue will be considered by the State for extension with a term per that article; the extension application is filed at least six months before expiry. Practical conditions include: the investment project still in force/extended correspondingly, the land still planning-conformant, and the investor having properly performed land obligations during the lease. Extension is not an automatic right — extension planning must start before the six-month minimum milestone, in parallel across both the investment and land files.
This article has been quality-reviewed by the FLAW AI Legal Council