Draft Decree Detailing Enforcement of Investment Law: Regulations on Investment Procedures Overheated

Regarding the provision on "Transfer of investment project", Mr Luong Thanh Quang from Rajah & Tann LCT Lawyers Firm, said, compared with the Law on Enterprises of 2005, the Law on Investment of 2014 allows investors to transfer a part of a project to other investors. However, the draft Decree lacks specific regulations for project transfer conditions, steps, procedures and time for adjusting Investment Registration Certificate in case of project transfer or steps and procedures of adjusting Business Registration Certificate in case investors transfer a part of projects and transfer capital as well. The unclear definition results in difficult application or inconsistent application from locality to locality. Land speculation may occur if this shortcoming is abused.

 

Therefore, he proposed that the draft Decree necessarily specify conditions of the transfer project, sequence, procedures and time for considering and granting investment registration certificate when the project is transferred. In reality, in some cases, the change of investor is caused by the operational restructuring of such investor in a foreign country (split, consolidation or merger). Besides, the Decree needs to provide detailed instructions for this kind of cases to help investors avoid difficulties when they register to change the investor information with licensing authorities.

 

With respect to the regulation on “Suspension of investment project” in Article 43 of the draft Decree, Mr Ho Xuan Thang, Dean of Law Department, Saigon University (SGU), said that, from the perspective of project discrimination, the provision will be easily abused by investors by basing on inadequacies to dodge the law to extend the execution duration of their projects. This is a simple but very loose regulation, he added. An investor temporarily suspends or extends the execution progress of his project by notifying the case to investment registration authorities but the regulation does not specify the time limit for the notification. What if he does not report on the suspension or extension of his project, Thang said. Such questions should be raised and answered by members of the Drafting Committee with a compulsory legal norm where the draft Decree itself will play a significant role in making investment effective in the future, he added. Thang proposed changing the regulation on “Suspension of investment project” with the definition that "At least in 10 days of suspension or extension of project, the investor shall send a written notice to competent investment registration agency”, “Within 10 working days from receipt of documents specified in Clause 2 of this Article, the investment registration agency shall approve or disapprove of such suspension or extension of project. In case of dismissal, the investment registration agency must reply in writing stating the reason for such dismissal."

 

Also commenting on the regulation on "suspension of investment project", Lawyer Tran Van Tri, Director of Fujilaw Law Firm, proposed supplementing Clause 4 that in case the company has only one investment project, it must carry out business suspension procedures as per Article 200 of the Law on Enterprises after it receives the approval of investment suspension.

 

As regards the regulation on "Revocation of investment project” in Article 47, Mr Tran Hai Duc, a representative from the Vietnam Quality Association of Ho Chi Minh City (VQAH), said that the stipulation on compensations for revoked projects is unclear and lacks justifiable basis, thus risking the interests of investors. He proposed that the regulation on “revocation of investment certificate” needs adding Clause 8: Where the company has only one investment project, it must register new investment certificate for new projects in 15 days from the date of receipt of official decision on revocation of investment certificate otherwise it will be dissolved as per Article 202 of the Law on Enterprises.

 

Regarding the regulation on "Liquidation of investment project at the back of revocation" in Article 44, Lawyer Hoang Van Son, Head of VNC Lawyers Office, said this provision does not specify a complete solution when it repeats Clause 3, Article 48 of the Law on Investment “Investors liquidate investment projects on their own in accordance with the law on the liquidation of assets upon termination of investment projects". Where investors deliberately prolong the delay of liquidating assets by quoting higher prices than true value, the State shall have stronger measures like a deadline term of 12 months. If investors fail to liquidate their assets, the State agency will set prices, hold an auction for asset liquidation and transfer the assets to other investors.” He suggested, “It is better to use judicial measures rather than administrative measures, as the latter tends to cost more resources of investors and the State".