Vietnam has made significant progress in drafting investment laws to create favourable conditions for foreign investors to do business in the country. Following the enactment of the Foreign Investment Law in 1987, policy makers are finalising the Common Investment Law, which is expected to be tabled at the upcoming session of the National Assembly scheduled for later this year.
According to the Ministry of Planning and Investment, since 1987, Vietnam has attracted 5,563 foreign direct investment (FDI) projects capitalised at US$48.8 billion, of which US$25.8 billion has been disbursed. In the first seven months of this year alone, foreign investors poured US$3.2 billion into Vietnam, up 66 percent against the same period last year. The positive results testified to the correct enactment of the Foreign Investment Law in 1987 and the Government’s strategic policies in implementing the Doi Moi (Renewal) process.
However, Vietnam is facing tougher competition in attracting FDI capital, and creating a more transparent and consistent legal system is considered one of the Government’s top priorities. Several changes have been drafted, which have received a warm response from investors and represent positive steps in attracting FDI capital in Vietnam.
Decentralisation is considered one of the most important reforms in licensing investment procedures. Previously, all investment applications were submitted to the Ministry of Planning and Investment for approval. Now, provincial People’s Committees and management boards of industrial parks, export processing zones and high-tech parks can license a certain number of FDI projects.
This policy has reduced licensing time and, as a result, the number of the licensed projects has increased significantly. The policy has also heightened the responsibility of local management agencies so that they pay more attention to investors’ aspirations and encourage investment in their localities.
In addition, investment procedures have been greatly simplified. Several localities such as Ho Chi Minh City and Binh Duong province have applied information technology advances in granting licenses. Accordingly investors can register via the Internet and the results are provided within three days.
The Government has abolished some regulations, under which foreign investors earlier had to establish joint ventures with new domestic partners, transfer fixed assets to the State and increase profits for Vietnamese partners.
Changes in investment mechanisms and forms have received praise from foreign investors. Investors are now allowed to establish wholly foreign-invested enterprises and joint ventures, and sign business deals with other partners. They are also allowed to split, merge or transform their businesses into other forms.
In particular, foreign-invested enterprises can be transformed into joint-stock companies, instead of only limited companies as before. They can increase registered capital by issuing shares and having their shares listed on the stock market. These flexible changes have helped investors seek the most effective investment options.
Foreign investors have also enjoyed benefits from the reform of other legal documents. Notably, after signing the Vietnam-US Bilateral Trade Agreement in late 2001, the Vietnamese Government implemented numerous measures to liberalise its market, thus helping all foreign investors quickly approach and gain access to the Vietnamese market.
The promulgation of several legal documents relating to the most favoured nation status and the national status in international trade has created more equal treatment among foreign companies, organisations and individuals in Vietnam.
The Land Law, which has been revised several times, has helped investors expand operations in Vietnam with less obstacles. Several changes in home ownership have created a surge in foreign investment capital in Vietnam, particularly from the overseas Vietnamese community.
Other legal documents on finance, taxation and trade arbitration have been revised in line with international practices to benefit investors.
The National Assembly Standing Committee is considering and receiving opinions from business circles for the draft Common Investment Law and Unified Enterprises Law before they are submitted to the National Assembly. The two laws are expected to usher a new era for an improved investment environment in Vietnam
VOV - (03/08/2005)