On June 20, 2023, the Government promulgated Decree 35/2023/ND-CP ("Decree 35") amending and supplementing a number of articles of Decrees related to the construction sector; Decree 35 includes many important contents, affecting the implementation of investment projects by investors/enterprises as follows:
1. All investment projects built within the scope of urban development or investment projects in areas in specific functional areas are subjected to create detailed planning, including small-scale projects
Compared to the previous provisions in Decree 37/2010/ND-CP and Decree 44/2015/ND-CP, Decree 35 gets many adjustments to this issue as follows:
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Criteria |
Previous provisions |
Provisions in Decree 35 |
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1. Criteria for determining small-scale plots
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- The plot is less than 5 hectares or less than 2 hectares for apartment projects.
- Implemented by an investor. |
- Smaller plots of land less than 5 hectares or less than 2 hectares for residential projects or less than 10 hectares for investment projects on construction of factories, enterprises, industrial production facilities or technical infrastructure works (except for technical infrastructure works along lines)
- Implemented by an investor or a competent authority |
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2. Detailed planning requirements |
Not required |
Required but allowed to be made according to the abbreviated process. |
2. Specific provisions on urban development programs
The urban development program is one of the bases for setting up urban development investment projects according to Clause 2 Article 4 of Decree 11/2013/ND-CP; however, Decree 11/2013/ND-CP does not specify the concept, conditions to be met, necessary contents, order and competence to establish, appraise and approve urban development programs. Accordingly, in order to complete the above-mentioned issues, Clause 3, Article 4 of Decree 35 has specified these issues, as a basis for the implementation and management of investment projects in urban areas.
Accordingly, urban development programs must be formulated for urban levels in provinces, cities directly under the TU, and also areas proposed to form new urban areas with contents and development plans for the period of 05 years and 10 years in accordance with the general planning and master plans, specialized and technical strategies.
3. Legislate the name and allow the provincial People's Committee to decide on the transfer of land use rights by itself in the form of subdivision or sale of the ground
Decree 35 allows the provincial People's Committee to specify the areas where land use rights can be transferred in the form of subdivision or sale of foundations for people to build their own houses under the following conditions:
a. The self-construction of houses by people must comply with the approving detailed planning, meeting the legal regulations on land, housing, and real estate business.
b. The project is suitable for urban planning levels; has completed an investment in infrastructure construction of the entire project or according to the approved investment period.
c. Not belonging to areas with high management requirements for landscape architecture, the facades of regional roads and above and the main landscape routes in the city, the central area, and around the works are architectural highlights in the city.
d. The determination of areas to be allocated for sale must be based on urban planning, urban development programs of each municipality, approved architectural management regulations, and national technical regulations on construction, infrastructure, and urban planning.
4. Investors of social housing projects are only exempt from land use levy and land rent for the area allocated or leased by the State for the construction of social housing
Decree 35 clearly stipulates that social housing construction investment projects include independent social housing construction investment projects and social housing construction investment projects using a land fund of 20% of the total residential land area within the scope of commercial housing construction investment projects, urban areas for investment in the construction of social housing.
Decree 35 has a significant change in the policy for social housing development, that is, investors of social housing projects (projects not using budget capital or similar) will only be entitled to preferential exemption from land use levy and land rent for the area used to build social housing without including the area/land fund for the construction of commercial business projects has been approved by the competent authority within the scope of the social housing construction project as before.
However, in case the social housing construction investment project has made an investment policy decision during the effective period of the old decrees (Decree No. 100/2015/ND-CP and Decree No. 49/2021/ND-CP) until before the effective date of Decree 35 but is applying the preferential mechanism under these decrees, the implementation shall continue incentive mechanisms in place;
5. Additional types of costs are defined as compensation, assistance, and resettlement costs
Decree 35 stipulates that expenses related to the use and change of land use purposes, water resources, and marine resources as prescribed by law (if any) are also defined as compensation, support, and resettlement expenses and may be considered for deduction from land rent (in case the investor advances himself in compensation expenses ground clearance) in accordance with the law.
6. Specific guidance for phased, project-by-component project implementation
Article 50 of the Law on Construction allows projects to be divided into component projects or investment phases for implementation; However, specific issues when implementing investment by component project or by stage (according to investment phase) such as preparing or approving feasibility study report for the whole project or each component project; What contents must the feasibility study report of the component project contain... The law has not been specifically guided by the Law on Construction and other Decrees. Accordingly, Decree 35 provides specific guidance on the above issues as follows:
a. Decree 35 allows the preparation of construction investment feasibility study reports for each component project and each project implementation phase (for one or several works under the project) when the project has investment phases but must ensure conformity with the decision on investment policy or decision approving the investment policy or document investment approval or investment registration certificate issued by a competent authority;
b. If a construction investment project is divided into component projects, the competence to appraise the construction investment feasibility study report of a specialized construction agency shall be determined according to the group of the component project and the grade of the work belonging to the component project;
With the above regulations, the implementation of the project according to each component project or phase (investment phase) will be favorable and have a clear legal basis for implementation.
Decree 35 takes effect from June 20, 2023.
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