IP developers worried about regulation of one-time land lease payments

IP developers worried about the regulation of one-time land lease payments

At the conference to provide feedback on the draft amendments to the Land Law, Law on Real Estate Business, and Law on Housing, organised by the Ho Chi Minh City National Assembly Delegation on July 30, Trinh Xuan Duc, deputy general director of Becamex Group, raised a concern that allowing only a one-time payment of land rent for the entire lease period would increase costs, impact cash flow, and hinder the ability to engage investors.

According to the draft, infrastructure projects for industrial parks (IPs), industrial clusters, and high-tech zones will only be allowed to lease land on a one-time payment basis. Investors will not be allowed to choose annual land lease payments or convert from one-time to annual payments.

Meanwhile, according to the current regulations, applying for one-time land lease payments for the entire lease period or annual payments just depends on the land users’ decision.

“The new regulations will create significant pressure on IP infrastructure developers. Although large corporations have sufficient resources to pay in full for convenience and to attract foreign investment, most infrastructure businesses currently choose the annual payment method,” Duc said.

“If they are forced to pay in a lump sum, small and medium-sized enterprises will be limited from participating in IP infrastructure investment. Because if land lease fees are paid in a lump sum, they will have to fulfil their financial obligations even for areas where infrastructure is incomplete, and no investors have yet been attracted to the IP. This will affect the project's cash flow, increase capital costs, lead to higher infrastructure lease prices, and reduce competitiveness in attracting investment,” he said.

Based on this reality, the Becamex Group leader proposed maintaining the current regulations, allowing IP infrastructure developers to choose or switch between lump-sum and annual payments depending on their business plan.

The company also proposed adding a type of digital technology park infrastructure to the group eligible for this mechanism under the law on technology, and clearly defining transitional provisions for IPs currently paying annual land lease fees when the new law comes into effect.

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