Land law amendments

With the objective of addressing areas of uncertainty and concern arising from
the Land Law and its implementing Decrees, the Government issued Decree No.
17/2006/ND-CP on 27 January 2006 (“Decree‿) to amend and supplement a
number of articles of Decree No. 181/2004/ND-CP dated 29 October 2004
(Decree 181) on the implementation of the Land Law , Decree No. 182/2004/ND-
CP dated 29 October 2004 (Decree 182) on the handling of administrative
violations in relation to land matters, Decree No. 187/2004/ND-CP dated 16
November 2004 (Decree 187) on the conversion of state companies to joint-
stock companies, Decree No. 197/2004/ND-CP dated 3 December 2004 (Decree
197) on compensation, support and resettlement on land resumption by the
State, and Decree No. 198/2004/ND-CP dated 3 December 2004 (Decree 198)
on the collection of land use fees.

Amendments and Supplements to Decree 181

Use of land

Land already allocated for use for defence and security purposes, national or
public use, for construction of industrial parks or for non-agricultural production
and/or business activities may not be used for real estate development, except
in cases where the authorities legitimately approve the change of land use
purpose.

Auction of land use rights

Land use rights shall be auctioned when the State assigns land and collects land
use fees, leases land or when land use rights are subject to judgments or debt
recovery, except in cases where:

- an auction has been held at least twice but fails or where only one investor
lodges an application for allocation or lease of a certain land area for an
investment project; or

- land is to be used for implementation of investment in construction of dwelling

houses for resettlement, construction of dwelling houses for rent or purchase by
poor people and low-income earners, or for construction of houses for official
use; or

- residential land is allocated to officials or public servants who are assigned to

other working places; or

- compensation or site clearance has not been made.

Conditions for land use right transfer

Under the Decree, for land in current or planned cities or townships or new
urban centres, developers are not allowed to transfer land use rights of land lots
to individuals or households on which houses have not yet been built. However,
developers may transfer the land use right of land lots which have been
completed with infrastructure in accordance with the project plans to “economic
entities‿ (which includes companies). It is required that the transferee must use
the land in accordance with the approved project plans.

For other areas, developers are allowed to transfer land use rights of land lots to
economic entities, individuals and households after the infrastructure is
completed.

Certification of land related documents

Other than certification by a notary office or by people’s committees, land

documents may now be certified by management boards of industrial parks,
economic zones or hi-tech parks for land allocated within these areas.

In case of transfer, lease or sublease of the land use rights, mortgage,

guarantee or capital contribution of land in industrial parks, economic zones or
hi-tech parks, contracts or papers relating to exchange, transfer, lease,
sublease, inheritance or donation of land use rights or mortgage, guarantee or
capital contribution using land use rights must be certified by the management
boards of the respective industrial park, economic zone or hi-tech park.
Registration of leasing or subleasing

Leasing or subleasing land in industrial zones must comply with procedures for
registration of leasing or subleasing land use rights. The lessor or sublessor
must submit one dossier comprising of the leasing or subleasing contract and
the land use right certificate or other land use right papers to the management
board of industrial zones.

Amendments and Supplements to Decree 187

In respect of land which equitising enterprises are holding in the form of

allocation, their land use right value must be included in the value of the
equitised enterprises at values set and announced by provincial/municipal
people’s committees. If stated values do not match actual market prices of land
use right under normal conditions at the time of equitisation,
provincial/municipal people’s committees shall decide on the proper value.

Amendments and Supplements to Decree 197

Organisations and individuals which are allocated land by the State with
payment of land use fees or which are leased land and have advanced money
for compensation or site clearance support are entitled to have such advanced
amounts deducted from land use fees or land rents payable to the State.
However, the amount to be deducted must not exceed the payable land use
fees or land rents.

Amendments and Supplements to Decree 198

Land use fees exemption or reduction will not be available in cases where land
use rights are auctioned for allocation with payment of land use fees or where a
lease of land is changed to allocation of land with payment of land use fees for
production and/or business purposes except in cases where:

- land use fees are exempted under the Law on Promotion of Domestic
Investment.
- land is assigned for real estate investment projects for people with meritorious
service to the revolution.

- land is assigned for construction of students’ dormitories utilising money from

the State budget, for re-settlement of people due to natural calamities, land is
used for construction of dwelling houses of ethnic minority peoples in areas
facing exceptionally difficult socio-economic conditions and land is used for
construction of high rise condominiums for industrial park workers.

- land is used for construction of public works for commercial purposes in the
areas of education, healthcare, culture or sporting facilities.

- it is residential land within land assignment quotas including land use right
certificates granted to current land users and land use purpose conversion for
people with meritorious services to the revolution under a decision of the Prime
Minister.

- households and individuals have been granted land use right certificates and
the land has been used continuously since before 15 October 1993.

Implementation

This Decree took effect on 27 February 2006 and revokes previous contrary
regulations.

Conclusion

With the issue of the Decree, the Government has resolved some difficulties
which investors faced as a result of implementation of the Land Law. The
restrictions in respect of transfer of land use rights for undeveloped land have
been relaxed to some extent but developers must still complete infrastructure
works before subdivision and sale of vacant land and only in the cases
described above.

Vietnam Economic Times - No.146 [ 2006-04-01 ]