Vietnam: Current Issues and Solutions for Investment and Outlook on Major Trade Deals TPP 11 and EUVNFTA

Last Updated: 18 December 2017
Article by Oliver Massmann


The legal framework for the real estate sector in Vietnam is set with the Law on Real Estate Business 2014 (LREB), the Law on Residential Housing 2014 (LRH) (both effective since 1st July 2015). The LREB is guided by Decree No. 76/2015/ND-CP, the LRH respectively is guided by Decree No. 99/2015/ND-CP. In addition, long-awaited Decree No. 01/2017/ND-CP was released on 6 January 2017 and is amending three decrees guiding the law on land 2013 (Land Law).

The provisions of the mentioned regulations have brought more investment in the real estate market to Vietnam. They have reduced barriers for investment and widened accessibility to properties in Vietnam.


However, not every issue is solved yet.

1. Delay in issuance of land use right certificate (LURC) for foreign investors

The issuance of the land use right certificate to foreigners is one essential requirement for developing projects on purchased land. Article 75 of Decree 95/2015 provides the obligation for the Department of Construction on issuing the "Foreign Ownership Prohibited Projects List". However, the list is not released yet. As result of that, the Department of Natural Resources and Environment is refraining from issuing LURCs to foreigners.

As conclusion, the Foreign Ownership Prohibited Projects List should be issued as soon as possible so that foreigners purchasing land in Vietnam can obtain the LURC and are able to develop their projects.

2. What are ''foreign invested enterprises"?
The LREB, the Land Law and the Law on investment 2014 (LOI) rule about "foreign invested enterprise". There remain uncertainties about this term.

The LREB is not providing any definition for foreign invested enterprises. Furthermore, the Land Law is providing that joint ventures enterprises, 100% foreign invested enterprises and Vietnamese enterprises of which foreigners are buying shares, merche with and acquire are included as foreign invested enterprises without any given guidance about percentage of ownership. Under the LOI an economic organization with foreign investors being member or shareholder shall be a foreign invested enterprise if part of ownership of the foreigner in the economic organization is 51% or more. On the other hand, organizations with foreign members or shareholders holding less than 51% are not classified as domestic enterprises under the LOI.

However, this issue is crucial due to different treatment of foreign invested and domestic enterprises. For example, domestic enterprises are able to transfer land use rights in form of division whereas this is prohibited to foreign invested enterprises.

Further, the Document No. 386/BXD-QLN (28 February 2017) issued by the Ministry of Construction states that the LREB does not need to provide provisions relating to foreign invested enterprise as the LOI has already did. However, Document 386 does not state that LREB can adopt the same definition of foreign invested enterprise the term remains ambiguous under the LREB.

3. Restrictions on sources of capital

Due to limiting the sources of capital for residential housing by the LRH, foreign developers cannot obtain loans from offshore credit institutions and non-credit institutions anymore. This measure is reducing the ability and opportunity to raise capital effectively and the competitiveness for foreign developers. Even though, there is no necessity for limiting opportunities to raise capital from legitimate sources.

4. Change of land user rights in case of acquisition of shares/ capital contribution

Article 2.27 of Decree 01/2017 provides the obligation for enterprises on assigning for land use rights or registering changes in the land and assets attached to the land when there is any change in the land user in case of acquisition shares or contribution of capital with land use rights included. In case of acquiring land, the land still remains with the same enterprise. Furthermore, the assigning process can impose financial obligations. This issue can lead to difficulties for investors when they acquire shares or contribute capital in enterprises.

5. Investment Approvals

The main approval for residential developments is either an investment in-principle decision (IID) or investment in-principle approval (IAA). In addition, an investor wishing to establish a company in Vietnam needs an investment registration certificate (IRC).

a. Circumstances requiring an IID:

Article 32 of the LOI is ruling the requirement of the IID that is only applying to projects where developers receive land use rights from State directly by way of allocation or lease of land without auction, tendering or transfer. Furthermore, the Land Law states the only way developers can receive land from State is either by way of allocation or lease of land. As a result, it is uncertain in which way developer can receive land by transfer.

b. Investment approval for capital contribution by way of land use rights:

Under a joint venture between a domestic and foreign investor to develop residential housing projects, the domestic investor will contribute capital by way of land use rights. In such case the IID is required only in cases of allocation or lease of land by the State without auction tendering or transfer. It is uncertain if the IIA will be required in cases of tendering or transfer.

Under the Law of Construction 2014 the developer has to obtain the construction permit before he can commence the project. It is not clear if the IIA is required to obtain the construction permit. This requirement could lead to lack of ability on proceeding the project in cases where obtaining the IIA failed.

On the other hand, if the IID is required, the developer will have more assurance because of the possibility to obtain the IID before the land use right is contributed.

c. Overlapping investment approvals

As mentioned above, the LOI provides the requirement of the IRC apart from the IID and IAA. For projects which require the IID, the IRC will be issued automatically after 5 working days from the Issuance of the IID. The content of the IID is similar to the IRC and no additional documents are necessary for issuance of the IRC. As a result, the IRC is not necessary when the IID is issued.

For projects requiring the IIA, the developer shall obtain the IRC first, then set up the company before obtaining the IIA. As mentioned above, the developer is unable to develop the project without IIA in cases of failing to obtain the IIA. Furthermore, the IIA and IRC are dealing with authorities and their approvals and the IIA is issued based on the 1/500 planning approval so that the necessity of the IRC is not given.

6. Capital contribution in the form of land use right

The Land Law and the Law on Enterprises 2014 provide possibility of contribution land use rights by individuals of a peace of land as capital to an enterprise for a certain time period.

Under Article 80 of Decree No. 43/2014/ND-CP (15 May 2014) on guiding the Land Law, capital contribution in form of land use rights shall terminate if the individual capital contributor passes away. As a result, if the capital contributor is passing away the capital contribution agreement will be terminated which will cause affection of the enterprise's LURC and its land use rights. On the other hand, the Law on Enterprise 2014 stipulates that if an individual contributes land as capital the enterprise will have the right over the land.

Therefore, Article 80 of Decree No. 43/2014/ND-CP has caused confusion and uncertainty for developers in case to consider receiving land use rights from individuals.

7. Conducting real estate business on land contributed as capital

Under the Land Law, domestic and foreign invested enterprises are entitled to receive capital contribution by way of land use rights. However, there is no provision in the LREB regarding contributions as capital for organizations and individuals. As a result, organizations are not entitled to receive capital contribution by way of land use rights for developing real estate projects. This is causing inequalities and an unfair competition in the real estate sector.


In January 2017, US President Donald Trump decided to withdraw from the US' participation in the TPP. In November 2017, the remaining TPP members met at the APEC meetings and concluded about pushing forward the now called CPTPP (TPP 11) without the USA. The agreement shall be signed by all member states by the first quarter of 2018. After that, it has to be ratified in each member state before taking effect.

The effects of the TPP 11 promising great benefits for the real estate sector in Vietnam. The TPP 11 is targeting to eliminate tariff lines and custom duties among member states on certain goods and commodities to 100%. This will make the Vietnamese market more attractive and could cause motivation for foreign enterprises to settle to Vietnam for building warehouses, offices, setting up plants or even for investing in the real estate sector because the market is becoming more dynamic with the TPP.

One another notable major trade agreement is the EUVNFTA between the European Union and Vietnam. The EUVNFTA offers great opportunity to access new markets for both the EU and Vietnam. It will help to bring more capital into Vietnam. In addition, the EUVNFTA will boost the most economic sectors in Vietnam. Establishments in other economic sectors in Vietnam will have impact on the real estate sector due to its association with these sectors such as healthcare, technology or education.

Furthermore, the Investor State Dispute Settlement (ISDS) will ensure highest standards of legal certainty and enforceability and protection for investors. We alert investors to make use of these standards! We can advise how to best do that! It is going to be applied under the TPP 11 and the EUVNFTA. Under that provision, for investment related disputes, the investors have the right to bring claims to the host country by means of international arbitration. The arbitration proceedings shall be made public as a matter of transparency in conflict cases. In relation to the TPP, the scope of the ISDS was reduced by removing references to "investment agreements" and "investment authorization" as result of the discussion about the TPP's future on the APEC meetings on 10th and 11th November 2017.

Further securities come with the Government Procurement Agreement (GPA) which is going to be part of the TPP 11 and the EUVNFTA.

The GPA in both agreements, mainly deals with the requirement to treat bidders or domestic bidders with investment capital and Vietnamese bidders equally when a government buys goods or requests for a service worth over the specified threshold. Vietnam undertakes to timely publish information on tender, allow sufficient time for bidders to prepare for and submit bids, maintain confidentiality of tenders. The GPA in both agreements also requires its Parties assess bids based on fair and objective principles, evaluate and award bids only based on criteria set out in notices and tender documentation, create an effective regime for complaints and settling disputes, etc.

This instrument will ensure a fair competition and projects of quality and efficient developing processes.


The mentioned issues are affecting the competitiveness in the real estate sector. The given restrictions, additional obligations for foreign investors, the lack of clear guidelines on implementing regulations are hurdles for investors seeking to invest in this sector in Vietnam. In view of the government's commitments to ensure growth and the issues mentioned above, it is necessary to create clear guidelines for eliminating confusion to the investors and real estate buyers. Furthermore, the upcoming major trade agreements will have a great impact on the development of the real estate sector in Vietnam. On the other hand, the Vietnamese government still has to make further improvements on the legal environment for ensuring the implementation of the agreements.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions