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Legal Bulletin: February 2024

1. New Housing Law

The National Assembly adopted the Law No. 27/2023/QH15 on Housing (“Housing Law 2023”) dated 27 November 2023. With effect from 01 January 2025, the Housing Law 2023 replaces the Housing Law 2014, as amended (“Housing Law 2014”). Below are some key provisions of the Housing Law 2023.

Housing project developers

A housing project developer is defined as an organisation selected to conduct the housing project in accordance with the provisions of the Housing Law 2023. The housing project developer can be either a real estate enterprise that satisfies the conditions stipulated in this Law, or an organisation that carries out a housing project by public investment capital or trade union finance sources.

For commercial housing projects, the developer must be a real estate enterprise that has an equity capital as required by real estate business laws for implementation of the relevant project, and has the capacity and experience to implement the project. The developer must also (i) be allocated or leased land after being successfull at the auction of the land use rights (LUR) or winning tender for selection of the investor to implement a project using land, or in other cases the investor is approved when organising auction or tender according to investment laws; or (ii) have the in-principle investment decision approved together with the approval of the investor of the commercial housing project when the investor holds LUR or obtains LUR through an agreement on receipt of LUR for the type of land eligible for implementation of commercial housing projects according to land laws.

Foreign ownership of houses

The Housing Law 2023 retains the provisions of the Housing Law 2014 that (i) foreign-invested economic organisations investing housing construction project in Vietnam under which such organization is the investor of the respective project, (ii) foreign individuals permitted to enter into Vietnam which are not vested with preferential rights or diplomatic immunity and (iii) foreign organisations (including foreign-invested economic organisations, representative offices and branches of foreign companies, foreign investment funds and foreign bank branches operating in Vietnam) provided that such foreign organizations must have valid investment related-documents or other documents relating to the permitted operation or establishment in Vietnam, may purchase and own houses (including residential houses or apartment) in housing projects, except those in national defence and security areas under Vietnamese laws.

Foreign organisations and foreign individuals may own up to 30% of the total number of apartments in an apartment building or up to 250 separate houses in an area having a population equivalent to a ward level. The ownership term of foreign individuals is 50 years which can be extendable, and the ownership term of foreign organisations is not more than the duration stated in their investment certificates including any extension.

Mortgage of housing projects

Housing project developers are permitted to mortgage all or part of their projects or houses constructed in such projects at credit institutions operating in Vietnam. The mortgage of the project or houses must include the mortgage of land use rights.

In case housing project developers have mortgaged all or part of their projects or houses but have demand for capital mobilisation or selling or lease-puchasing those houses, they are required to release all or part of the mortgaged projects, houses, land use rights before entering into capital mobilisation contracts, contracts for sale and purchase or lease-purchase of houses with customers, except the cases provided in clauses 3.b and 4.a of Article 88 of the Housing Law 2023.

Social houses and houses for workers in industrial zones

The Housing Law 2023 provides various incentives for developers of social housing projects such as exemption of land rentals and land use fees, preferential tax treatment, low-interest loans, and support for technical infrastructure system connection. The provincial People’s Committees takes responsibility for construction of technical infrastructure system outside the fence of social housing projects.

The Housing Law 2023 removes the requirement that social housing project developers must reserve at least 20% of the area of social houses in the project for lease and may sell such houses to current tenants after 05 years of lease.

The Housing Law 2023 includes specific provisions for development of houses for workers in industrial zones. Industrial zone developers must identify the workers’ demand to rent houses in industrial zones, formulate and obtain approval for the planning, and construct technical infrastructure and social infrastructure for houses for workers in industrial zones. Industrial zone developers shall construct themselves or sublease the land for enterprises in industrial zones to construct houses for workers after completion of infrastructure construction.

Stricter requirements applicable to investors of mini-apartment building

Individuals having land use rights is permitted to construct (i) houses of at least 2 storeys where each storey accommodates dwelling units designed, built for sale, lease purchase, or a combination of sale, lease purchase, lease or (ii) houses of at least 2 storeys and at least 20 dwelling units for lease (generally referred to as “mini-apartment building), provided that such individuals satisfy conditions to be investors of housing construction project, and the construction is in compliant with the laws on construction and other provisions of related laws regulating the housing construction project.

Maintenance fee in apartment buildings

The Housing Law 2023 requires the housing project developer to open a payment account at a bank currently operating in the locality where the apartment building is located for receiving maintenance fee from purchasers and lease-purchasers of apartments in the apartment building before entering into contracts for sale and purchase or hire-purchase of apartments.

Within 05 working days from the date of opening the account, the housing project developer must notify the provincial housing management agency of information about the payment account (including name of the account holder, account number, name of the bank at which the account is opened and the deposit term). Purchasers and hi-purchasers shall pay maintenance fee into the payment account.

2. New Law on Water Resources

The National Assembly adopted the Law No. 28/2023/QH15 on Water Resources (“LWR 2023”) dated 27 November 2023. The LWR 2023 takes effect from 01 July 2024, except some provisions which will be effective later, and replaces the Law on Water Resources 2012 (as amended).

The LWR 2023 governs (i) management, protection, balancing, distribution, restoration, development, exploitation and use of water resources, and (ii) prevention and overcoming harmful effects caused by water in Vietnam. Sea water and underground water within the exclusive economic zones and the continent shelf, mineral water and natural thermal water are fully excluded from the scope of this Law.

Except certain cases provided in the LWR 2023, organisations and individuals that exploit water resources for domestic use, agriculture, aquaculture, industrial manufacturing, hydropower, irrigation, sport, tourism, commerce and services, and other purposes must obtain water resource exploitation licences from the Ministry of Natural Resources and Environment or the provincial People’s Committees. The LWR 2023 also specifies activities that are subject to registration requirements, and the authorities responsible for receiving water resource registrations are the provincial or district-level People’s Committees.

In order to prevent the degradation, depletion and pollution of water sources, organisations and individuals carrying out activities that cause land collapse and subsidence and/or water degradation, depletion, pollution and salinisation have to take remedial measures and compensate for damages (if any) in accordance with laws. Further, wastewater discharged from production, business and services activities, from urban zones and concentrated residential areas must be collected, treated and controlled according to environmental protection laws.

The LWR 2023 adds a new requirement that owners of projects involving exploitation and use of water and discharge of water in areas where surface water is no longer capable of load-bearing capacity as announced by the competent State agency must have solutions to use circulated water/re-use water or have a plan on wastewater treatment which meets the environmental technical regulations on surface water quality before discharging into water sources according to environmental protection laws.

Under the LWR 2023, orgnisations and individuals that are licensed to exploit water resources shall pay fees for granting water resource exploitation rights in the following cases: (i) exploitation of surface water for power generation and (ii) exploitation of surface water/underground water for production, business and/or services activities, aquaculture, agriculture and domestic use. There are certain limited cases of water resource exploitation where licensed organisations and individuals are entitled to a fee exemption or reduction. Further details on payment and method for calculation of fees for granting water resource exploitation rights will be set out by the Government.

3. Trade remedy measures

The Ministry of Industry and Trade (MOIT) issued Circular 42/2023/TT-BCT (“Circular 42”) dated 28 December 2023 to amend Circular 37/2019/TT-BCT dated 29 November 2019 on trade remedy measures. Circular 42 takes effect from 16 February 2024.

Under Circular 42, if an organisation or individual fails to register to become a concerned party in a trade remedy case within the time limit decided by the MOIT for that case, the investigating agency shall consider to approve or explain the reasons for its refusal of the registration within 07 business days from the date of receipt of the registration of the concerned party.

Circular 42 amends the categories of goods that could be exempted from application of trade remedy measures. These goods now include: goods that are not produced domestically; goods with characteristics different from goods produced domestically and where such good produced domestically are not replaceable; goods being special products of similar goods or directly competitive goods produced domestically; and similar goods or directly competitive goods produced domestically but not sold on the domestic market on the same commercial terms or in force-majeure events leading to the supply shortage for domestic production. The MOIT may refuse to grant exemption if (a) the application of such exemption might result in fraudulent acts for evasion of trade remedy measures, or (b) the exempt entity refuses to cooperate or inadequately cooperates with the post-exemption inspection team of the investigating agency.

Circular 42 requires exempt entities to report, on a six-monthly basis during the exemption period, the status of import and use of the exempt goods and the compliance with the conditions and obligations of such exemption to the investigating agency.

4. Restructure of agriculture companies and forest companies

On 12 January 2024, the Government issued Decree 04/2024/ND-CP (“Decree 04”) to amend Decree 118/2014/ND-CP dated 17 December 2014 on restructuring and development of agriculture companies and forest companies. Decree 04 takes effect from 01 March 2024. Some key points of Decree 04 are as follows:

– 100% State owned agriculture/forest companies can be converted into joint stock companies or two member limited liability companies (LLCs). With respect to agriculture companies with land using plan of 500ha or more, and forest companies with land using plan of 1,000ha or more, the State still holds a majority of shares (more than 50% of charter capital) following equitisation or a majority of capital contribution portion following conversion into two member LLCs.

– The conversion of a 100% State owned agriculture/forest company into a two member LLC shall be conducted through selling a part of State capital in a company to an investor. The investor selected to purchase State capital is required to satisfy certain conditions and give certain commitments to support the converted company (such as retaining the major business for at least 03 years, holding capital contribution portion for a period of at least 05 years since the date the company is issued with its enterprise registration certificate).