Business and Investment Laws Revised: Perfection of Investment Protection and Mechanisms in Accordance with Int’l Commitments

 

According to Quach Tuan Ngoc, Deputy Director of the Legal Department under the Ministry of Planning and Investment, the amendment of the investment law aims to institutionalize the constitutional principles of the business freedom of citizens in business lines that are not prohibited by law, and create new movements in administrative reform in investment activities associated with the innovation and improvement of the effectiveness and the efficiency of the state management of the investment activities in order to complete the decentralized investment management mechanism. This helps the investors to overcome the difficulties and carry out the investment activities.

 

The amendments of the Investment Law also improve the mechanisms of the incentives and the investment protection that comply with the commitments to the market opening and the liberalization of the investment under the international treaties or the upcoming in the future.

 

 Tuan said that the drafted investment law will mention to the prohibited business and investment lines and the conditional business lines to create a list of prohibited business lines under the Enterprise Law, the Law Investment and other laws, which will be generalized in the draft Investment Law (as amended). The prohibited business and investment lines which are not defined in this Act have no effects. The provisions of the draft Law on the conditional business and investment lines that are applied uniformly to all the domestic investors and the foreign investors.

 

Regarding the incentives and the investment support, the Investment Law (Revised) clarifies the application of the preferential forms, rules, procedures and conditions that regulate the investment incentives as well as lists the additional projects that are eligible for the investment incentives; such the projects include the labour-based ones in the rural areas and the major ones that will be disbursed in a short time rather than the current ones that are categorized only in the incentive areas for investments. The amended law will regulate the list of the business lines with the incentives, and update the new entries with the investment incentives in some areas like high technology, agriculture and other activities to encourage the investment and development of the key industries such as the supporting industries, promote the technological innovation and create value-added products in the direction and strategies of the social and economic development.

 

On the investment procedures, according to Tuan, the amendments of the Investment Law abolish the issuance of the investment certificates for the domestic investors. Regarding either the large projects under the jurisdiction and the approval of the National Assembly and the Prime Minister or the project under the ownership of the state and the people, the investors need to follow up the principles prior to the implementation.

 

Regarding to the foreign investors, the registration process of the investment certificate will be improved by deregulating the examination of the investment certificate and issuing the one-time investment certificate to help shorten time from 45 days to a maximum of 15 days with more simple and transparent procedures.

 

The amended law will be applicable to the FDI enterprises which have the investors with more than 51 percent of the registered capital and the economic groups which have the majority of the foreign investors and the investors holding 51 percent of the registered capital.

 

Such the cases are applicable for the establishment of the businesses, capital contribution, purchasing of the shares, and the implementation of the investment projects.

 

Regarding to the investment from Vietnam to other countries, Tuan said that the Investment Law will be amended and improved on the basis of the transparency and simplification of the legalization of the provisions of the foreign investment under the Decree 78/2006/ ND-CP and the issuance of the registration certificate of the foreign investment. At the same time, the Investment Law will be amended to complete the mechanism of the state management of the investment activities through the increasing audits, the additional investment reporting, the monitoring and evaluation mechanisms of the investment, and the strengthening of the information technology applications in the investment management to simplify the administrative procedures.

 

Either the prohibited business lines or the conditional lines of business and investment often change. Some business lines, after being tested, will not be prohibited or limited. Meanwhile, there are new business lines that need to be banned or restricted by the business conditions. Therefore, it is important to frequently review and update the lists of the business lines.

 

However, the actual amendment of the provisions of the law is not easy and regular so if the provisions are still amended, I am afraid that they will not be updated and effectively managed as expected.

 

Besides, the conversion of the investment and business registration certificates, as defined in the Investment Law in 2005, should be taken into account. In particular, some companies that have been granted for the certificate functioned for both of the investment and the business operation will have demands to separate the two functions of this paper: one is for business certificate and another is for investment certificate.

 

The regulations on the investment procedures of the Draft Law also show many shortcomings so it is necessary to rescind the rules relating to the registration procedures and the investment evaluation. The fact shows that there is a huge overlap in the procedures, which even makes the local government confused about the steps. Moreover, the validity of the investment certificate is not clear, which neither supports for the investors nor create more complicated procedures.

 

Besides, there should be clear rules about the concept of the "investment projects". Under the Clause 8, Article 3 that defines the concept of the "Investment Project" as the collection of the proposals for the reimbursement of the medium term or long-term capital to carry out the investment activities on a specific geographical area and for a determined period. However, to the majority of the FDI enterprises, the investment project is the company that the foreign investors formed. Even though the draft has removed the requirements that the current investment law is applied.

 

but the Article 34 of the draft still requires the contents of the set of the investment registration documents to include the investors, the investment objectives, the investment scale, the investment forms, the capital, the location, the duration and the schedule of investment, the technology and original certificates of the technologies, the standards of the goods and services, the implementation plans and expected effectiveness of the project (if any). Thus, in order to be granted for the investment certificates, the foreign investors still need to propose a "investment project". This regulation does not represent the nature of the investment projects and distinguish between the projects in theory and the projects in practices.

 

The biggest goal of the Act is to control large investment projects and investment projects in sensitive areas to avoid impacts on the public rather than affecting all the projects and the licensing application for all projects. Therefore, the licensing requirements should be consistent, uniform and simple as possible. To amend the law towards the positive impacts, the law makers should rescind the rules on the investment certificates under the investment law. Instead, the foreign investors will implement the business registration procedures under the provisions of the Law on Enterprises.

 

Regarding the important foreign investment projects with large capital or in the sensitive areas relating to the land use, environmental impacts, and other important public benefits, there should be the agreement of the authorized state agencies like the National Assembly and the Prime Minister. Once approved, the investors are allowed to perform the procedures to obtain the business registration certificate as prescribed. In this case, the business registration procedures will be similar to those that are applicable to the domestic investors.

 

The Investment Law Draft still remains the licensing procedures that have a few significant changes compared with the current law. We propose the law makers to consider the draft and review the directions as suggested.