Draft Law on Enterprise and Investment: Equal Treatment Needed for Foreign Investors

At the workshop, most participants were interested in clarifying the concept of foreign investors. Referring to “foreign investors” (and foreign invested enterprises), the process of applying the Enterprise Law and Investment Law in 2005 showed inadequacies, such as the unclear concept of foreign investors in the Investment Law as well as the guidelines (in some legal documents, foreign investors are those who own 51 percent of capital while in others 1 percent is accepted); mechanisms; the unreasonable enforcement and inspection of trading rights to foreign investors; the existing cases of cross-ownership.

 

The ambiguity in the concept of foreign investors led to gaps and discriminatory treatment. However, according to Dr Vu Tien Loc, President of VCCI, the discrimination between internal and external investors is insignificant, and the most important thing is how the capital is used.

 

Dr Loc said the fact is that the current law was discriminatory for foreign investors (business) both in business registration - market entry procedures and business rights. The discriminations mainly create more procedures for foreign investors in terms of paperwork, time and cost, but do not contribute to the implementation of the targets. Basically the discriminations are unnecessary and sometimes they hinder foreign investment in Vietnam and limit the effectiveness of capital flow in the economy. Therefore, VCCI proposes eliminating all discriminations on procedures between domestic and foreign investors, and modifying Laws on Investment and Enterprise to maintain discrimination mechanisms relating to trading rights (to be defined in accordance with reasonable foundations and the international commitments and to be taken by specialized management agencies in each area).

 

Also regarding the concept of foreign investors, Mr Nguyen Viet Khoa, Director of the Centre for Business Law Consultancy and Training, Faculty of Law, Ho Chi Minh City University of Economics, said that the Investment Law created discrimination between local and abroad investors, particularly in relation to investment procedures. Due to the different issuing times, scope and objects, investment policies in Vietnam do not have consistency and do not create a field for fair play; make discrimination between investors, limit resources. If investment procedures were simple and convenient through business registration, Vietnam would have been able to attract more foreign investors, providing more jobs for local people and contributing to the country's economic development during the last 8 years.

 

Assuming that it was the complicated and unnecessary procedures for investment, Vietnam had lost a lot of opportunities in attracting foreign investment, Mr Khoa concluded: "For investment procedures, we can completely allow foreign investors to register under the Law on Enterprise 2005 as domestic investors, which creates a fair business environment for investors regardless of being domestic or foreign, and appropriates the international commitments that Vietnam has been taking on as well.”

 

Agreeing with Mr Khoa, Lawyer Phan Thong Anh, Standing Member of Vietnam Bar Federation, Director of Vinalaw Firm; Arbitrator at Vietnam International Arbitration Center (VIAC), gave recommendations on an equal treatment between domestic and foreign investors. These two capital contributors are both needed for the national economy, therefore, we should discriminate against neither of them.