The Vietnam Land Law 2024, promulgated by the National Assembly on 18 January 2024 and effective from 1 August 2024, introduces significant reforms regarding land access and land use rights for foreign-invested economic organizations. These changes are designed to broaden land-related rights and gradually create a more level playing field between foreign-invested enterprises (FDI enterprises) and domestic enterprises, thereby maximizing the economic potential of land resources within Vietnam’s market economy.

Redefining the Concept of a “Foreign-Invested Economic Organization”

Under the Vietnam Land Law 2024, a foreign-invested economic organization—commonly referred to as an FDI enterprise—is an economic organization that is required to satisfy investment conditions and follow investment procedures applicable to foreign investors under the Investment Law when implementing a project involving land use.

Accordingly, the term “foreign-invested economic organization” under the Vietnam Land Law 2024 is limited to the entities specified in Article 20.1 of the Investment Law 2025, namely economic organizations in which more than 50% of the charter capital is directly held by: (i) foreign investors; (ii) economic organizations in which foreign investors hold more than 50% of the charter capital; or (iii) both foreign investors and the economic organizations referred to in item (ii) above.

Land Use Rights Acquisition by Foreign-Invested Economic Organizations

Foreign-invested economic organizations may acquire Land Use Rights (“LURs”) through the following mechanisms:

Land Access from the State

• The State allocates land for investment projects involving residential housing development for sale or for sale combined with lease; or where the investor uses land obtained through the acquisition of a real estate project in accordance with real estate business laws in cases where the State allocates land subject to land use levy payment.

• The State leases land with annual land rental payments or a one-off land rental payment for the entire lease term in cases that do not fall within the categories of land allocation without land use levy or land allocation subject to land use levy under the Vietnam Land Law 2024.

• The State allocates land where a foreign-invested economic organization receives land compensation upon land recovery by the State.

Land Access Through the Market

• Acquisition of investment capital represented by the value of Land Use Rights

• Receipt of capital contributions in the form of Land Use Rights

• Acquisition of Land Use Rights within industrial parks, industrial clusters, and high-tech zones

Other Land Access Mechanisms

• Acquisition of Land Use Rights pursuant to an award or decision issued by a Vietnamese commercial arbitration tribunal. This is a new mechanism introduced under the Vietnam Land Law 2024.

In addition, the Law continues to recognize other forms of Land Use Rights acquisition inherited from the Land Law 2013, including: (i) successful mediation outcomes in land disputes recognized by the competent People's Committee; (ii) agreements under mortgage contracts for debt settlement purposes; (iii) decisions of competent state authorities regarding land disputes, complaints or denunciations, court judgments and decisions, and enforcement decisions that have been duly executed; (iv) documents recognizing lawful auction results of Land Use Rights; and (v) lawful documents concerning the division or separation of Land Use Rights among groups of land users sharing common land use rights.

Removal of Restrictions on Receiving Capital Contributions in the Form of Land Use Rights

This is one of the most groundbreaking reforms under the Vietnam Land Law 2024 and provides substantial benefits for mergers and acquisitions (M&A) transactions.

Under the Land Law 2013, only joint venture enterprises established between foreign organizations or individuals and Vietnamese enterprises were permitted to receive capital contributions in the form of Land Use Rights.

The Vietnam Land Law 2024 has removed this restriction and expanded the right to receive capital contributions in the form of Land Use Rights to all foreign-invested economic organizations.

This reform significantly enhances flexibility for foreign investors and creates additional opportunities for structuring investment and M&A transactions in Vietnam.

Greater Financial Flexibility Through Conversion of Land Rental Payment Methods

The Vietnam Land Law 2024 allows foreign-invested economic organizations that are eligible for land lease arrangements with a one-off rental payment for the entire lease term to continue paying the remaining lease term on a one-off basis where applicable under the Law.

Furthermore, foreign-invested economic organizations that are currently leasing land with a one-off rental payment for the entire lease term may elect to convert to the annual land rental payment mechanism.

This new flexibility enables foreign-invested enterprises to optimize capital allocation and manage cash flow more efficiently throughout the lifecycle of their investment projects.

Conclusion

The Vietnam Land Law 2024 represents a transformative reform that substantially narrows the gap in land-related rights and benefits between FDI enterprises and domestic enterprises.

By diversifying land access mechanisms—from direct access through the State, secondary market transactions, to independent dispute resolution institutions—the new Law transforms land in Vietnam from a legal landscape often perceived as complex and restrictive into an investment resource that can be more effectively controlled, utilized, and commercially leveraged by foreign investors.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Regulations may change — please verify with qualified counsel before taking action.