The Ministry of Natural Resource and Environment (MONRE) recently published a draft new land law (Draft) for collection of public comments before submitting the Draft to the National Assembly. Among other notable changes introduced by the Draft, the change to regulations on land rental payment method may attract attention. While this issue has been briefly covered by our comment of draft Land Law, below are our in-depth comments on the proposed change:

• Under the Draft, the land users, who lease land from the Government, may select to pay land rental on either annual basis or lump-sum basis for the whole term if their lands are (i) lands for implementing projects of agricultural manufacturing, forestry, aquaculture, salt production, or (ii) lands for industrial zone, industrial cluster, export-processing zone, or hi-tech zone. With respect to other types of land, the only option available to the land user is payment of land rental on an annual basis. This regulation appears to be an unwelcome change given that under the current Land Law 2013, the land users are free to choose a suitable land rental payment method regardless of their types of land. In addition, this gives rise to several issues as discussed below.

• Issue 1: The transitional regulations of the Draft do not make clear on whether land users who currently use land with lump-sum payment of land rental under the Land Law 2013 but is now only entitled to annual payment method is required to convert into annual land rental payment. From the land users’ perspective, clarification of the issue is essential as they would want certainty on their current use of land. In the author’s view, the Draft should supplement a transitional regulation which permits land users to preserve their form of lump sum land rental payment until the expiry of the existing land use term. This would clarify that the new regulations will not impose retrospective effect on the users who currently lease lands from the State with one-off rental payment.

• Issue 2: The transitional regulations of the Draft also do not make clear on whether annual-rental-payment land users who is entitled to convert into lump-sum rental payment under the current Land Law 2013 will still be entitled to continue to choose lump-sum payment upon the new land law comes into effective. Reasonably speaking, the Draft should contain a transitional regulation which allows the foregoing land users to preserve the option to convert into lump-sum rental payment until the expiry of the existing lease term. This is because under Article 152.2 of the Law on Laws, a new law must not impose retrospective effect on an act with more onerous legal liability. From the land users’ perspective, the change to types of land entitled to lump sum rental introduced by the Draft could impose a higher financial burden on the land users as the land rental (a type of legal liability) tends to increase over time.

• Issue 3: Under the current Land Law 2013, a land user, due to restrictive financial condition, may choose to pay land rental on annual basis at early stage of the lease term, and then convert into lump-sum rental payment to secure the affordable rental price. Given the changes to regulations on land rental payment method under the Draft will likely to take place and it is still not clear if the draftsman of the Draft would adopt such transitional regulations discussed above, the land users may consider exercising option to convert into the lump-sum rental payment under the current Land Law 2013.

This post is written by Nguyen Hoang Duong and edited by Nguyen Quang Vu.