Although the Investment Law has been implemented for five years, management agencies have yet to promulgate guidelines on investment procedures. Unnecessary obstacles have therefore emerged.

Overseas Vietnamese and investment hurdles

Since the Investment Law was compiled, Vietnam has aimed to eradicate discrimination against investors. However, there have not been guidelines on whether overseas Vietnamese are considered domestic or foreign investors. Some opine that overseas Vietnamese should have a choice.

In late 2010, the Government amended the guideline on foreign-invested enterprises via Decree 102/2010. According to this decree, businesses with a foreign stake of over 49% are treated as foreign economic organizations. In this case, the investment certificate serves as the business registration license, too. This is not entirely consistent with the Investment Law, which stipulates that foreign investors comprise foreign organizations and individuals. The procedure for share and project transfer is also inflexible and vague, deterring many foreign investors who are mulling over investment in Vietnam.

The clash of interpretations

While several investment-related laws and guidelines have been implemented and revised, including the Investment Law, the Construction Law and a law aimed at amending laws pertaining to capital construction, concepts revolving around investment projects, feasibility studies, pre-feasibility studies and investment reports have not been explained clearly. Law enforcement can therefore be inconsistent and spell trouble for enterprises, which must sometimes fulfill unnecessary procedures.

Consequently, it is still costly and time-consuming to comply with investment laws while the investment environment continues to leave much to be desired. Five years have elapsed, but the feasible task of unifying investment guidelines has not been carried out. In late 2010, the Government enacted Resolution 70, which has detailed provisions on simplifying investment procedures. Unfortunately, this resolution has yet to consider dealing with the aforementioned problems.

Cumbersome procedures

Several issues need urgent solutions, but related guidelines are still nowhere to be found. In addition, Decree 108/2006 has been studied and revised for years, but has yet to be promulgated. For example, the investment conditions and some other requirements stipulated in Decree 108 are unclear. The investment incentive application procedure for investors with projects in different localities and sectors is also in need of detailed instructions. Some investors have given up their hopes of tapping into these investment incentives because of onerous procedures.

The greatest problem relates to land policies. According to investment laws, investors are to fulfill environment, investment and construction procedures in that order, while land procedure can either precede or follow investment procedure. However, some localities require investors to fulfill land procedure before investment procedure to ensure projects are feasible. In addition, investors are burdened by the need to submit financial capability reports, investment condition reports (attached to the applications or otherwise), location introduction statements (by local authorities), letters of approval by agencies tasked with public investment use and so on. It may take an entire year to clear these administrative hurdles.

Also problematic are the procedures governing such activities as capital contribution, foreign share acquisition, business scope revision, investment certificate amendments, capital expansion for new projects, capital transfer, mergers with wholly foreign-owned enterprises, as well as project delay, liquidation or transfer (upon completion).

To improve the investment environment, the Government should identify and immediately obliterate investment hurdles, probably via procedure simplification guidelines. This will help investors overcome problems posed by investment-related regulations.

Source: SGT