Some shortcomings of the 2014 Investment Law have not been overcome by the 2020 Investment Law

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The Investment Law 2020 and the Guidance Documents were born with one of the wishes to “create more favorable conditions for the registration of investments; reduce costs and administrative procedures in investment and business activities”1. However, all the shortcomings of the 2014 investment law have not been overcome, on the contrary, there are still shortcomings which have been raised by many academics, jurists, lawyers, … but which have not yet been been resolved. Specifically, some shortcomings in investment procedures still exist in the 2014 Investment Law, as follows:

a. Deficiencies in the implementation of procedures related to the proposal of land use needs

Article 33 of the Investment Law of 2014 stipulates that when applying for the approval of the investment policy of the people’s committee of the province, it is necessary to submit the application for the proposed land use ( if applicable) to the people’s evaluation committee of the province. land use needs. Meanwhile, Article 68, Clause 1 of Decree 43/2014/ND-CP guiding the implementation of the Land Law (“Decree 43”) relating to the assessment of land use planning, stipulates that only investment projects that have been If the investment policy is approved by the National Assembly or the Prime Minister, new are not required to perform this procedure.

This means that, in case the investment project has been approved by the Provincial People’s Committee, the investor still has to go through the procedure of assessing the need for land use. The same project needs to be appraised twice, and at the same time, it brings the risk that even if the policy has been approved by the people’s committee of the province, the investment project still risks not being awarded, leased or transferred. . for land use purposes as permitted by the investment policy decision.2

Section 33 of the Investment Act 2020 continues to maintain the provisions of Section 33 of the Investment Act 2014. Should be the position of a major investment law, the Investment Act investment 2020 should have more transparent provisions, for example, “if the investor has approved the investment policy by the people’s committee of the province, it is not necessary to carry out the land allocation procedures, rental of land, change of land use in accordance with the provisions of the land law Until Decree 43 is amended, it is not known when it will be corrected.

b. Requirements for the obligation to carry out procedures for granting investment registration certificates to foreign investors when establishing economic organizations

The Investment Law of 2014 and even the current Investment Law of 2020 continue to stipulate that foreign investors who wish to establish economic organizations must have an investment project by applying for an investment registration certificate . There have been many controversial opinions on this issue.

The above regulations were created to control foreign direct investment (FDI) flows from foreign investors investing in Vietnam, and to control the activities and conditions of industries that restrict market access for foreign investors. However, in case foreign investors do not focus too much on investment through setting up a company, the investor can complete the procedures/forms of capital contribution, purchase of shares and purchase of capital contribution to an existing company. Or even, the investor can completely agree with a Vietnamese partner, let the Vietnamese partner establish a company first, then the foreign investor will buy shares and buy capital contributed to the newly established company.

Meanwhile, the procedure of establishing an investment project by issuing an investment registration certificate requires more documents, providing more information and explanations from the investor than the procedures of capital contribution, purchase of shares and purchase of contributed capital, and therefore investors have little reason to carry out the procedures for issuing an investment registration certificate.

Thus, the objective of state management of the regulations that required foreign investors to apply for an investment registration certificate was not achieved. The solution may be to completely remove the mandatory requirement of an initial investment registration certificate for foreign investors when setting up an economic organization, foreign investors only apply for an investment registration certificate. ‘according to their own needs (such as the need for investment incentives). It is enough to ask the foreign investor to declare in another form a document having the same contents as the document of registration of capital contribution, purchase of shares and purchase of contributed capital during the creation of an economic organization. Thus, the level of complexity of investment procedures when entering the market of foreign investors will be similar, whether choosing to establish an economic organization on their own or choosing to bring in capital , to buy shares or to buy a capital contribution to another economic organization.

vs. The list of conditional business lines according to Annex IV of the Investment Law 2020 still does not make much sense to reduce the burden of administrative procedures

The list of industries and trades with conditional commercial investment in accordance with Schedule IV of the Investment Act 2020 is contained in Schedule 4 of the Investment Act 2014. The meaning of this list is to ensure clarity of conditional lines of business so that investors and public bodies can carry out the relevant investment procedures on this basis. to somewhat limit the issuance of new business terms uncontrollably.

However, the problem with this list is that it exists but solves almost no problems and does not help investors reduce the burden of administrative procedures. Because firstly, this list is no more effective than the provisions of other legal documents, so if other legal documents have terms of trade different from this list, it will be required by those laws. Secondly, in accordance with regulations, the government will review and modify this list from time to time to “update” it and submit it to the National Assembly for approval to amend Schedule IV (Schedule 4) of the Law on investment, so if new regulations on the conditions appear but it is not time to publish the revised annex of annex IV, then this list will not be a reliable document for investors and public bodies concerned, but they will always have to use specialized documents published later.

This situation is qualified by certain lawyers and jurists as “indirect invalidation” of the List of conditional investments and trades3. The Investment Law 2020 still lacks groundbreaking regulations to ensure the conditional industries sense of business and investment.

According to the comments of the Vietnam Chamber of Commerce and Industry (VCCI) since the date when the draft investment law of 2014 is proposed for comments, the separate regulations on conditional investment lines are not necessary, for the same reasons as those mentioned above. The investment law, if any, should refer only to specialized laws on investment conditions.

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