REGULATIONS FOR RENTING FACTORIES IN INDUSTRIAL ZONES

REGULATIONS FOR RENTING FACTORIES IN INDUSTRIAL ZONES

 

Currently, most production projects by investors must be located within industrial zones or clusters. What are the current regulations regarding the leasing or renting of factories in industrial zones? Please refer to the following article from Siglaw.

 

What is subletting or renting a factory in an industrial zone?

Renting a factory in an industrial zone is when an investor rents a factory from the industrial zone developers. These developers are responsible for the infrastructure of the industrial zone and will have available land or factory spaces that meet regulatory requirements for rent to investors. In this case, the investor renting the factory is considered a primary investor.

Subletting a factory in an industrial zone is when an investor sublets a factory from businesses that are already operating within the industrial zone. These businesses may not fully utilize the land or factory space they initially rented from the industrial zone developer, so to avoid waste, they will sublet it to another entity. In this case, the investor subletting the factory is considered a secondary investor..

 

Conditions for subletting or renting a factory in an industrial zone

For factories available for rent or sublease:

• The factory is built on land or the right to use land belonging to the infrastructure developer or the primary investor (land tenant) who has paid the land rental fee in full for the entire lease period.
• The factory has all the necessary legal documents regarding the environment, fire safety, construction permits, etc.
• The factory available for rent has no disputes; it is not subject to enforcement or administrative decisions; if the factory is mortgaged, there must be written consent from the mortgagee.

 

Conditions for the business leasing or subleasing factories:

• The business must be registered in the real estate business sector within its business registration content or have real estate business objectives or factory subleasing within its investment project in accordance with legal regulations.
• For the party subleasing the factory: consent from the primary landlord (infrastructure developer) is required. This must be stated in the original contract or an annex. The subleased factory must be surplus and meet all legal conditions for leasing.

 

Conditions for the party renting or subleasing the factory:

• Conduct production activities in accordance with the lease or sublease contract.
• The production industry must align with the original purpose granted to the infrastructure developer; production activities must comply with the planning and land use plan of the industrial zone.

 

Lease or sublease contract:

• The lease contract must be established in the form prescribed by law.
• The contract should clearly delineate the responsibilities of the landlord and tenant regarding issues such as wastewater treatment, responsibility for collecting and transferring hazardous waste, responsibility for paying maintenance fees, and infrastructure renovation costs, etc.

 

Conditions for foreign investors to rent or sublease factories in industrial zones

• Have an investment project for production in the industrial zone.
• Meet conditions regarding the foreign ownership ratio in the economic organization.
• Meet conditions related to market access industries.
• Meet conditions regarding the scope of investment activities.
• Meet conditions regarding the form of investment.
• And other conditions.

 

Common issues when renting or subleasing factories in industrial zones

• The factory for rent or sublease does not meet the necessary rental conditions: lacking complete legal documentation regarding construction, fire prevention and fighting, environmental standards, etc.
• The factory has disputes.
• The sublessor does not meet the conditions to sublease: has not registered in the real estate business or, if there is an investment certificate, has not supplemented the objective for leasing excess factory space.
• The rental unit does not report or reports incorrectly on the rental situation of the factory to the management board of the industrial zone, leading to the rejection of the processing procedures.
• The business area of the lessee or sublessee does not align with the objectives and planning of the industrial zone.

Siglaw Law Firm

Phone: (+84) 961 366 238

Email:

• vphn@siglaw.com.vn
• vphcm@siglaw.com.vn

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