At its 44th session, the National Assembly Standing Committee expressed strong support for the Government’s proposal to reduce land rent by 30% in 2025. It also approved the addition of 11 new categories of beneficiaries eligible for land rent and land use fee exemptions or reductions under the 2024 Land Law.

This was not the first time the Government had introduced support policies via land rent reductions. However, when many businesses are struggling due to weakened demand, rising input costs and limited capital, this latest policy acts as a timely “tonic”.

According to Minister of Finance Nguyen Van Thang, the land rent reduction forms part of a reasonably expansionary fiscal policy strategy, easing the burden on businesses and supporting the GDP growth target of over 8% for 2025, as set by the National Assembly.

A much-needed boost for business

Since 2020, the Government has issued annual land rent reduction policies. The total amount of support has ranged from nearly 3 trillion to 4 trillion VND per year. In 2023 alone, approximately 4 trillion VND was allocated, clear evidence of the Government’s efforts to stand alongside businesses and citizens throughout the post-pandemic recovery.

The policy covers a broad range of beneficiaries, including all individuals, households and organisations using land leased by the State and paying rent annually. Notably, it also applies to cases where exemption or reduction periods have expired or where other forms of support are currently in place.

Beyond the 2025 land rent reduction, the Government has proposed expanding the list of 11 groups eligible for land use and land rent incentives, as stipulated in Article 157 of the 2024 Land Law. These include vulnerable populations, community service facilities, and key sectors prioritised for development.

This list features residents relocated from flood-prone areas in the Mekong Delta, fishing communities displaced due to environmental factors, agricultural cooperatives leasing land, and projects in education, healthcare and sports under socialisation schemes. It also supports enterprises investing in high-tech agriculture, innovation and artificial intelligence. Notably, the policy assists production facilities that employ ethnic minorities or people with disabilities.

The business community has welcomed the land rent reduction, viewing it as a continuation of supportive policies introduced since 2020. It is seen as having a direct impact on cash flow, reducing financial pressure and creating room for investment and production expansion.

According to Mac Quoc Anh, Vice Chairman of the Ha Noi Association of Small and Medium Enterprises, land rent reduction policies have saved businesses trillions of VND in recent years, enabling reinvestment, improved productivity, technological upgrades and reduced financial stress.

Moreover, applying this policy to strategic sectors such as AI, semiconductors, healthcare and socialised education, can make the investment climate more attractive. Domestic and foreign enterprises will be more confident in leasing land to expand factories and offices, creating more jobs.

Citizens pay land rent and land use fees. (Photo: NAM HAI)

A comprehensive approach needed

Nguyen Thu Cuc, Chairwoman of the Viet Nam Tax Consultants’ Association, noted that, according to the Ministry of Finance’s calculations, the 2025 land rent reduction could save businesses and citizens around 4 trillion VND. Importantly, this “revenue shortfall” should not be seen as a loss. On the contrary, it could generate a chain of positive effects for the economy.

“When businesses receive support, production and business activities recover, leading to job creation and increased incomes. As consumption grows, revenues from VAT, personal income tax and other taxes will also rise. This is how we sustainably nurture national revenue,” Ms Cuc explained.

From another perspective, Pham Duc Toan, CEO of EZ Viet Nam Land Development and Investment Joint Stock Company (EZ Property), cautioned that certain issues must be addressed if the policy is to be effectively implemented. He noted that the 30% rent reduction is reasonable for areas with moderate land price adjustments. However, in locations where land prices have surged, the reduction may not sufficiently alleviate the financial burden on businesses.

He also highlighted inconsistencies in land rent calculations across localities. In some neighbouring provinces, land rents differ by as much as 30–40%, creating an uneven playing field and adding pressure for businesses.

Similarly, Do Phuoc Tong, Chairman of the Ho Chi Minh City Association of Mechanical and Electrical Enterprises, said many companies are required to lease land from the State within industrial parks to build facilities. However, rising land rents have driven up operating costs. Previously, land price frameworks were adjusted every five years, but under the new Land Law, adjustments will be made annually to better reflect market prices, potentially resulting in further rent hikes in the near future.

Besides land costs, access to capital remains a major bottleneck for many businesses. At various forums and conferences, enterprises have voiced concerns over funding constraints, one of their most pressing challenges. Additionally, the soaring prices of imported raw materials have placed enormous strain on production costs. In this global economic climate, land rent reductions alone cannot resolve all the difficulties.

Experts suggest that the Government should roll out additional financial support packages, such as interest rate subsidies or long-term credit, extend policy duration, or increase support levels for severely affected groups. Identifying the right beneficiaries will also ensure fairness. A synchronised combination of such measures would not only help businesses overcome current hurdles but also stabilise the investment environment and foster sustainable economic growth.