On 15 May 2014 the Government promulgated Decree No. 43/2014/ND-CP (“Decree 43”) guiding and detailing the implementation of a number of articles of the Land Law.
According to Decree 43, those who are allocated land or leased land by the State, or permitted by the State to change land use purpose to implement investment projects, must fulfill the conditions on (i) financial capacity and (ii) investment projects using land.
Regarding the conditions on financial capacity
Decree 43 states that there are two requirements on financial capacity that must be fulfilled by investors:
- To have their own capital invested in the project at not less than 20% of the total investment where the project does not exceed 20 hectares; and not less than 15% of the total investment where the project exceeds 20 hectares.
- To have the ability to mobilize capital from credit institutions, branches of foreign banks and other individuals, organizations.
Other than these requirements, investors must pay a deposit in accordance with the investment law and must not violate the land law if they are implementing other projects on state-allocated or state-leased land.
Regarding the conditions on investment projects using land
Under Decree 43, it is stipulated that there are three types of investment projects for which the investors must fulfill all requirements above for the purpose of land allocation, land lease or changing land use purpose for the implementation of an investment project:
- Investment projects to construct houses for the purpose of sale, lease or the combination of sale and lease.
- Investment projects on real estate business associated with the land use right.
- Projects on manufacturing and business not using capital of the State budget.
Decree 43 also stipulates the point of time for the calculation of 24-month extensions with regard to the failure in using land or the lateness in the land using schedule, caused by certain force majeure events as stipulated in Decree 43. In particular, if the investor, due to such force majeure, fails to use land within a consecutive 12 months from the date of receiving the land, the investor shall be entitled to extend the term of land use from the 13th month calculated from the date of physical hand-over. In case the project is 24 months late under the proposed schedule, the investor shall be entitled to extend the term of land use from the 25th month as of the intended day to complete the construction.
Decree 43 took effect on 1 July 2014.