Leasing a factory for under a year is how FDI “tests the market” before a long commitment: running a pilot line, validating supply chains and labour. The law does not prohibit short leases, but shortness reduces none of the legal obligations attached to producing at that location. This article lists the points pilot projects most often miss — and that must be handled from the very first lease.
1. The pilot site is still a project implementation location
If the factory is where investment project activities are carried out, the factory address must be recorded in the investment file (the Investment Registration Certificate or an adjustment document) as the project implementation location — it cannot be leased “off the record”. The practical consequences: when the pilot ends and operations move to the official site, the enterprise must adjust the project location; when the pilot fails and the project terminates, the leased site forms part of the termination file. Leasing a factory as the company’s head office must also satisfy the head-office address conditions under the Law on Enterprises No. 59/2020/QH14 (a defined address lawfully used by the enterprise). Plan the investment file around the pilot life cycle from the start to avoid being cornered at expansion.
2. Operating obligations have no “pilot regime”
Three obligation groups apply in full whether you lease for one month or ten years: (i) fire protection — the works must hold valid fire-protection acceptance for the actual use function under Law 55/2024/QH15 and Decree 105/2025/ND-CP, and your activity must maintain a premises fire-management file; (ii) environment — depending on sector and scale, the project must complete the corresponding environmental procedure (environmental registration or an environmental licence under the Law on Environmental Protection 72/2020/QH14) and may discharge only through compliant systems; (iii) labour and safety — labour-use registration, internal rules and occupational safety for the pilot line exactly as for a permanent plant. Park management boards and regulators have no concept of “pilot, so lenient” — violations in a short phase are still sanctioned and recorded in the enterprise’s compliance history.
3. Lease documents and deductible cost
Short-term factory rent is an ordinary production cost; for it to count as a deductible expense in determining corporate income tax, the enterprise needs a written lease and valid payment documents (the lessor’s invoice if the lessor is a business organisation; if leasing from an individual/household, follow the tax rules applying to that lessor). Two frequent errors: leasing by verbal agreement or an “address borrowing” contract that cannot prove the real cost; and large cash payments without documents. The safe structure even for a three-month lease: a written contract stating area, price, term and early-termination conditions; bank payments; full invoices/documents each period.
4. Exit and extension clauses — the most important part of a short lease
A short lease needs four clauses drafted more carefully than in a long lease: (i) the extension right and the rent on extension (a successful pilot usually needs another 6–12 months to build/lease the official site — without an extension clause you renegotiate from weakness); (ii) the early-termination right if the pilot fails, with a capped penalty; (iii) the handover-back timeline and condition, and deposit refund; (iv) priority rights to continue leasing or lease a larger area in the same park on expansion. Also check the lessor’s own legal frame: their remaining land sublease term in the park must exceed your lease plus the intended extension — a “short lease” from a party whose land rights are about to expire is a mid-term cut-off risk.
Frequently asked questions
Does a 6-month factory lease require adjusting the Investment Registration Certificate?
Yes, if the factory is the project implementation location (or an additional location) — the project location is content recorded on the Investment Registration Certificate and a location change must be adjusted under investment registration procedures. Only a purely auxiliary warehouse outside the project location needs re-checking according to its actual use.
Is a pilot project exempt from environmental procedures because it is small?
There is no exemption by “pilot” nature; environmental procedures are classified by the project’s sector and emission scale under the 2020 Law on Environmental Protection: low-risk group projects need only environmental registration, while projects in the licensed category must hold an environmental licence before operating with discharge. Small scale lightens the procedure; it does not erase it.
Can we lease a short-term factory from an individual inside an industrial park?
Check that individual’s lessor standing: whether they hold a valid sublease/asset right in the park and are permitted to sub-lease it onward (infrastructure developer consent). Inside a park, lease rights usually run through the developer; leasing directly from an individual of unclear position is high legal risk — require the head lease and the written sublease-consent.
How many months’ deposit is usual for a short-term lease?
Market practice is commonly 1–3 months’ rent for short-term contracts (lower than long-term ones) — a matter of agreement, with no statutory level. More important than the amount are the refund conditions in the contract: the refund deadline after handover-back and the permitted deductions.
