Vietnam’s new special mechanisms for delayed projects

Vietnam’s new special mechanisms for delayed projects

Nishimura & Asahi’s Vietnam partner Nguyen Ngoc Phuc outlines key aspects of Vietnam’s newly introduced special mechanisms aimed at resolving long-standing legal bottlenecks affecting delayed real estate and infrastructure projects, with significant implications for developers, investors, lenders, and other stakeholders.

In recent years, many real estate, urban area, tourism and infrastructure projects in Vietnam have encountered difficulties or prolonged delays due to legal issues relating to land and investment matters.

These issues commonly arise in cases involving inspection conclusions, audit conclusions or court judgments relating to investor selection, land allocation, land lease, conversion of land use purpose or land price determination. In many cases, projects had already commenced, involved third-party transactions or raised capital before the violations were identified, making the legal handling of such projects more complicated.

To address these issues, the National Assembly and the government approved Resolution No.170/2024/QH15, Resolution No.29/2026/QH16 and Decree No.147/2026/ND-CP to establish special mechanisms for addressing legal issues and removing obstacles for pending and prolonged projects involving land law violations arising before the 2024 Land Law took effect from August 1, 2024.

Nguyen Ngoc Phuc, partner of Nishimura & Asahi (Vietnam)

On November 30, 2024, the National Assembly of Vietnam approved Resolution No. 170/2024/QH15 on special mechanisms to address problems relating to projects and land matters identified in inspection conclusions, audit conclusions, and court judgments in certain localities.

Notably, Resolution 170 establishes handling mechanisms for 13 projects in Danang and 11 projects in Khanh Hoa. Under the Resolution, investors may continue implementing projects provided they satisfy prescribed conditions, including consistency with applicable planning, compliance with national defence and security requirements, fulfilment of investor capability requirements, and full discharge of financial obligations in accordance with law, including obligations arising from the redetermination of land prices and recalculation of related financial liabilities.

Resolution 170 reflects a shift towards permitting the continued implementation of stalled projects in certain circumstances, particularly where projects have already progressed or involved investment, financial, or third-party transactions. Rather than automatically terminating projects or recovering land, the Resolution signals an approach focused on remedying legal and financial consequences to facilitate continued implementation.

Following the mechanism established under Resolution 170, the National Assembly approved Resolution No.29/2026/QH16 dated April 24, 2026 to expand the mechanisms for handling land law violations arising before the 2024 Land Law took effect on August 1, 2024 and to facilitate the resolution of pending projects.

Several notable mechanisms under Resolution 29 include the handling of projects granted Land Use Right Certificates in violation of law, projects involving violations relating to investor selection, land allocation, land lease or land recovery, and projects involving violations relating to land use purposes.

Handling of projects granted land use right certificates in violation of law

One notable aspect of Resolution 29 is its mechanism for handling projects granted Land Use Right Certificates in violation of the law. These include certificates identifying the land use purpose as “residential land (without formation of residential units),” “residential land (for construction and real estate or tourism business purposes),” or residential land containing information inconsistent with land law regulations.

Under the Resolution, provincial People’s Committees are responsible for reviewing the planning status of such projects based on independence, objectivity, and transparency. For projects consistent with applicable planning and having land use functions for residential development, the land use purpose may be adjusted to residential land, provided the investor fulfils its financial obligations and satisfies the conditions for continued implementation.

Other cases may be adjusted to commercial and service land in accordance with the Resolution.

In practice, the concepts of “residential land (without formation of residential units)” and “residential land (for construction and real estate or tourism business purposes)” had previously been applied in many resort and condotel projects before unified legal guidance was introduced. The mechanism allowing review and adjustment of land use purposes reflects an approach focusing on remediation of legal consequences and financial obligations as a basis for continued implementation.

Handling projects involving land and investor selection violations

For projects involving violations relating to investor selection, land allocation, land lease or conversion of land use purpose identified in inspection conclusions, audit conclusions or court judgments, provincial people’s committees may consider applying mechanisms similar to those applied to projects in Danang and Khanh Hoa under Resolution 170.

In certain cases, projects are not required to re-conduct land use rights auction procedures or investor selection tender procedures. Certain projects may also carry out investment policy approval procedures simultaneously with investor approval procedures to continue implementation.

Where the investor does not satisfy the capability requirements for continued implementation, the competent state authority may select another investor in accordance with law and reimburse compensation, support and resettlement costs advanced by the investor, together with construction costs incurred on the project land, if any.

These mechanisms may have significant implications for projects currently facing legal issues relating to land use rights auctions, investor selection tenders or land allocation and land lease procedures.

Handling of projects involving violations relating to land recovery

For certain projects where the state recovered land in circumstances not permitted under law, but the investor had already incurred costs for recovery of the entire project land area, the investor may continue implementing the project if the conditions prescribed under the Resolution are satisfied.

Several key conditions apply, including that the investor satisfies the capability and eligibility requirements for project implementation, is currently managing, using, and carrying out construction investment on the land, and that the land recovery involved partial fault of the state. In addition, the venture must be free from disputes, or any disputes must have been fully resolved, and the project must be consistent with applicable planning in accordance with the law.

Where the project does not satisfy the conditions for continued implementation, the state will terminate the project and reimburse relevant costs in accordance with law.

In many cases, investors had already advanced compensation, support and resettlement costs or carried out construction investment over a long period before inspection conclusions or disputes relating to land recovery arose.

Resolution 29’s mechanism permitting continued implementation in certain cases reflects an approach that considers the actual implementation status of projects and matters identified in inspection conclusions, audit conclusions or court judgments.

Handling of projects involving violations relating to land use purposes

For certain projects involving violations relating to land use purposes that have already obtained investment policy decisions or approvals, investment approvals, investor approvals and are consistent with relevant planning, provincial people’s committees may review and adjust project objectives, amend land allocation or land lease decisions, or permit conversions of land use purpose to continue implementation.

However, investors are still required to fully fulfill their financial obligations, return any unlawful profits arising from the violations, and remain subject to administrative penalties in accordance with the law.

One notable aspect is that the resolution permits certain works consistent with planning not to be subject to mandatory demolition, rather than applying demolition measures in all violation cases. This reflects an approach focusing on remediation of financial obligations and legal consequences in order to minimise impacts on investment and business activities and the use of assets.

On May 7, 2026, the government approved Decree No.147/2026/ND-CP guiding implementation of Resolution 29 regarding mechanisms for handling certain land law violations and removing obstacles for pending and prolonged projects.

Decree 147 provides guidance on several key mechanisms under Resolution 29, including handling projects granted Land Use Right Certificates in violation of law;continuing land allocation or land lease for projects involving violations relating to investor selection, land allocation or land lease; and handling projects involving violations relating to land recovery.

For projects granted land use right certificates in violation of law, the decree provides guidance on procedures for reviewing planning, adjusting land use purposes and land use terms, redetermining land prices, land use fees and land rental payments, and handling issued certificates.

For projects involving violations relating to investor selection, land allocation or land lease, the decree provides guidance on reviewing conditions for continued implementation, land allocation and land lease procedures, determination of financial obligations and treatment of costs advanced by investors.

For projects involving violations relating to land recovery, the decree provides guidance on reviewing conditions for continued implementation, procedures for land allocation, land lease or conversion of land use purpose, and reimbursement of investor costs where projects are not permitted to continue.

Decree 147 provides detailed guidance on procedures, implementation authorities and methods for determining additional financial obligations.

This may facilitate implementation of the special mechanisms under Resolution 29, particularly given that the handling of pending projects previously faced difficulties due to the lack of detailed guidance among relevant state authorities.

The mechanisms under Resolution 170, Resolution 29 and Decree 147 demonstrate a notable shift in the approach towards handling projects involving land law violations arising before the 2024 Land Law took effect.

In certain cases, the new mechanisms permit continued implementation after review of legal conditions, planning, financial obligations and investor capability.

This approach reflects a broader policy direction towards remediation of legal consequences and financial obligations rather than automatic project termination or land recovery.

The mechanisms may reduce the risk of complete cancellation and create opportunities for continued implementation, restructuring or revival of delayed projects, particularly where projects have already commenced construction or involve third-party relationships.

However, these mechanisms will still depend significantly on the review process conducted by state authorities, particularly in relation to planning, scope of violations, financial obligations and investor capability.

Accordingly, investors, project owners, lenders and relevant parties should review the legal status, planning, land dossiers, financial obligations and relevant inspection conclusions, audit conclusions or court judgments relating to projects to assess the possibility of applying these mechanisms.

Early preparation of legal documentation and appropriate handling plans may significantly affect the ability to continue implementing projects.

VIR