Many Provisions in Investment Law Need to Be Amended

To pool up comments of members of VCCI, Vo Tan Thanh, Director of VCCI, Ho Chi Minh City Branch (VCCI-HCM), said that to really meet the expectations of the business community and contribute to improving the investment and business environment in Vietnam, the business community expects that the regulations of the Investment Law should ensure correspondence to the provisions of the business entity, particularly the Law on Enterprises, to adopt the principles of the freedom of business noted in the Constitution, that is considered the foundation for all related regulations. To do this, the Investment Law needs to remove registration procedures like business certificates for all investment projects except those using state resources or those having significant impacts on unavailable resources or those that are key national projects and requiring the approval of the Prime Minister. At the same time, all the provisions related to the rights of investors during the implementation of the investment projects should be removed because their rights are regulated in other documents. According to Mr Thanh, if necessary, the Investment Law only regulates the self-determination right of investors in all matters related to the implementation of the investment projects in accordance with provisions of the relevant laws.

Regarding the investor, Dr Nguyen Dang Liem, Principal of Gia Dinh IT University commented that the draft Investment Law (amended) should clearly define Vietnamese investors who are living abroad (Viet Kieu or Overseas Vietnamese) as either Vietnamese citizens or foreign investors who invest in Vietnam under the Investment Law. Also according to Mr Liem, investment by foreign investors should be expanded through trading stocks of domestic enterprises and FDI enterprises. Besides, the number of shares should be regulated based on specific areas, which limits participation by foreigners.

 

With regard to investment procedures, Dr Ho Xuan Thang, Lecturer of the Law Faculty of the Saigon University, proposes an amendment of Article 9 that regulates the extension of the investment progress. Mr Thang explains that this regulation does not illustrate the definitive legal documents, but reflects discretionary elements. Especially, Clause 1 of Article 9 is still too plain that its does not clearly regulate licensed projects which investors must submit written reports to business licensing authority when they plan to extend investment and construction progress. This raises an unexpected loophole that directly affects and slows down overall implementation progress of the project. Mr Thang said that the regulation unexpectedly encourages delay in completion of the investment projects in practice. Especially, Clause 1, Article 9 does not specify whether it is legal or not if investors extend the project without giving notice to the authority and what the punishment is for this case. On the other hand, the concept of the extension of the investment progress is not mentioned in the draft. This causes inconsistent understandings of the concept and many difficulties once the law is executed.

Regarding business licensing procedures, Tran Van Tri, Director of Sai Gon Fuji Law Firm said that maximum time to process investment profile is 45 days under the provisions of the Investment Law, but this provision is not feasible in practice. In the draft, Clause 2, Article 34 specifies the processing time of the investment profile is significantly shortened to only 15 days. In this case, Mr Tri said the infeasibility is higher because the legal system has no sanctions to punish those who try to delay investment application process. Therefore, Mr Tri proposes other regulations and sanctions to punish violators who do not comply with regulated processing time. On the other hand, it is necessary to build up a self-determination mechanisms of business licensing agencies who could make their own decision if they do not get any reply from the functional agencies at higher levels. The current mechanism of "Silence is consent" is taking a lot of time if agencies at local levels want to consult with relevant authorities.

 

Having different ideas from other experts at the seminar, Nguyen Viet Khoa, Director of the Centre for Training and Consultancy on Business Law, Law Faculty, Ho Chi Minh City University of Economics, said that it is not necessary to have Investment Law 2006. Mr Khoa indicated that Vietnam can absolutely allow foreign investment enterprises to register their investment projects, like domestic investors, under Enterprise Law 2005, thereby creating a fair business environment for investors, regardless of their nationality.

 

Mr Khoa added that if the Investment Law could not be removed, the Drafting Committee should explain clearly to the business community, especially the foreign business community, before proposing the new draft to the National Assembly relating to a number of issues of the Investment Law, especially the provisions on investment procedures in conditional business areas.

 

In addition, Mr Khoa proposed that the Drafting Committee consider special preferential policies for domestic enterprises, especially small and medium-sized enterprises (SMEs) who should be granted duty-free status for 3 years after establishment. This will help encourage business establishment. He also stressed that the current number of the 500,000 enterprises over the 90 million of people in Vietnam is extremely low compared to that of other countries in the world.

 

Mr Quach Ngoc Tuan, Deputy Director of the Legal Department of the MPI, highly appreciated the constructive comments of the experts. Mr Tuan said that these comments will be reported to the Drafting Committee for amendments to the Investment Law before it is passed in the upcoming meeting of the National Assembly.