Service business

Accommodation service company in industrial area

To satisfy the real demand of those who work in industrial zones (ZI), more and more investors are recently exploring the possibility of doing business of accommodation services (eg hotel, condotel, officetel, …) (hosting company) within ZIs.

However, there is no clear legal basis in Vietnamese laws for the accommodation activity to be carried out in an ZI. This is due to the fact:

a) Decree 82/2018 on ZIs prohibits people from residing in industrial zones, with the exception of foreign managers, general managers and experts who can temporarily reside in a company located in ZIs subject to the satisfaction of certain conditions. For example:

i) The temporary resident does not stay with his family and relatives;

ii) Temporary residence accommodation must be separated from production and office areas and meet construction standards applied to accommodation; the company must register the temporary residence for foreigners and commit to ensuring security, order and the absence of impact on the operation of ZIs; and

iii) The purpose of the temporary residence is to meet the commercial and production needs of the enterprise.

The above suggests that foreigners temporarily residing in an IZ can only stay in company-developed accommodation, rather than accommodation provided by a third party.

b) Although article 32.5 of Decree 82/2018 authorizes the development of social housing within ZIs for employees working in these ZIs, this type of housing should not cover short-term housing or multi-purpose apartments.

However, if ZIs are industrial – tertiary – urban zones (Service ZI), investors should be able to provide the hosting service within these AOIs, as this service should be covered by the objectives of the service AOIs. Specifically,

a) Under Decree 82/2018, a service ZI will comprise (i) a ZI as the main functional area, and (ii) an urban service area designed to have functions such as support and service provision public for the ZI (including homes, hospitals, schools, research and development centers, business incubators and other socio-economic projects necessary for the coherent and sustainable development of the entire territory); and

b) The development objectives of service ZIs are to (i) solve the problems related to the lack of housing, cultural and sports facilities and other social amenities to maintain the standard of living of employees in ZIs; and (ii) create a modern living and working environment, full of utilities and public services for residents and employees.