Distinction between TMD Land and SKC Land – Key Considerations in Business Operations

In the context of the continuous refinement of land laws, the proper classification and use of land are crucial factors for ensuring sustainable business operations and mitigating legal risks. Particularly, when selecting land for production and business activities, two types of land that often cause confusion are non-agricultural production land (SKC) and commercial and service land (TMD). Although both belong to the category of non-agricultural production and business land, each type has distinct purposes and specific legal requirements. 

1. Distinction between TMD Land and SKC Land

Land is classified based on its intended use. Within the category of non-agricultural production and business land, TMD and SKC land are defined as follows: 

• Commercial and Service Land (TMD): This type of land is used for the construction of business, service, and commercial establishments. Structures on TMD land include accommodation facilities, office spaces for rent, warehouses, shops, supermarkets, and facilities serving business and service activities. The key distinction is that activities on TMD land are not associated with industrial or handicraft production processes (Point b, Clause 5, Article 5 of Decree 102/2024/ND-CP). 
• Non-Agricultural Production Land (SKC): This type of land is designated for production facilities, including factories, industrial plants, and handicraft production establishments. SKC land is typically used for production activities outside of industrial zones or clusters. The primary purpose of SKC land is to serve manufacturing, processing, and the creation of tangible products (Point c, Clause 5, Article 5 of Decree 102/2024/ND-CP). 

Thus, TMD land is intended for “business and service” purposes, while SKC land is designated for “industrial production activities”. Using the land for purposes other than those approved—such as building production facilities on TMD land or establishing retail businesses on SKC land—violates legal regulations and may lead to significant legal consequences. 

2. Practical Application and Legal Gaps

Although the 2024 Land Law has clearly defined these categories, practical application still encounters certain challenges and legal gaps, creating difficulties for businesses in interpreting and enforcing the law. Based on Apolat Legal’s experience, this issue arises from several factors: 

• Combination of activities: Many business models today combine production and service activities. For example, a small production workshop may include a showroom for displaying and selling products. The current legal framework does not provide detailed guidance for such “mixed-use” business models, leading to confusion when determining the appropriate land type. 
• Differences in local administration: Land classification is not only based on the intended use but also on the zoning and socio-economic development policies of each region. In practice, some localities have allowed business and service activities on SKC land if they align with the broader development plan of the area. 

3. Recommendations for selecting land for business

Using SKC or TMD land for purposes other than those approved may lead to significant legal risks. Businesses may be subject to administrative penalties, be required to restore the land to its original state, or even be forced to repay any illegal profits derived from improper land use. 

Therefore, to ensure compliance with the law and minimize risks, businesses must exercise caution when selecting land for their operations. For activities with a commercial and service nature, choosing TMD land is the safest and most sustainable legal solution. Additionally, businesses should ensure that the land selected is in compliance with the current land use plan and applicable legal requirements to avoid potential risks. 

Date Written: 20/08/2025

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