Investors, especially foreign ones, are expecting more significant changes in the amended Law on Investment as they still have some concerns about the latest draft law.
The Ministry of Planning and Investment has recently released the draft law for comment, which is set to take effect on January 1, 2021.
Professor Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises, said that the Fourth Industrial Revolution is exerting large impacts on the Vietnamese economy with lots of new issues and sectors emerging, but Vietnam has yet to build rules for them. Meanwhile, the draft Law on Investment also just focuses mostly on tax incentives, but less on land and other supporting policies.
Besides, Mai said, the requirements on total investment for new or expanded R&D and innovation centers are quite tough for firms. Any project of the type must have total capital of VND6 trillion (US$260.8 million) or higher, and each of those in the sectors with special investment incentives must have total investment of at least VND30 trillion (US$1.3 billion) and disbursement of at least VND10 trillion (US$434.78 million) in three years.
Mai and businesses also agree that despite having a regulation on guarantee of investors’ interests when rules are changed, the draft pays attention to this for just investment incentives, and not the rights to asset ownership, asset transfer, legal transfer of profit to outsiders, and more.
The interested parties also urged for changes to make the draft more consistent with other laws such as the Law on Housing, the Law on Land, the Law on Environment Protection, and the Law on Real Estate Business.
For example, while the Law on Land states that provincial and municipal people’s councils allow the transfer of land use purpose for land paddy areas of less than 10 hectares, and less than 20 hectares of protective forest land, ministries make the approval for the transfer of land use purpose on islands and in coastal towns. Meanwhile, the draft amendment rules that the provincial and municipal people’s committees have power to approve investment plans for owners of projects with transfer of land use purpose regardless of the type of land.
Commenting on this, Dau Anh Tuan, director of the Legal Department at the Vietnam Chamber of Commerce and Industry, said that this causes confusion for enterprises, cities, and provinces because they do not know the people’s council or the people’s committee have this power.
Despite the concerns, the draft law includes some significant changes related the form of market access conditions and investment incentives for foreign investors.
Under the draft, the list of business lines with market access conditions for foreign investors is supplemented. The list includes the business lines that foreign investors are not yet allowed to access, and others that foreign investors are able to access but with conditions. With the business lines out of the list, the conditions for market access for overseas investors are the same as domestic ones.
This supplementation is aimed to simplify procedures, and increase transparency and feasibility in the application of the country’s commitments to open the market in alignment with new-generation free trade agreements and international treaties on investment.
According to the draft law, conditions for 12 business lines including commercial arbitration organizations, logistics and franchising, are proposed to be removed.
It also adds some sectors and investment activities subjective to investment incentives. They include R&D, business of products as a result of R&D, innovation activities, and manufacturing of goods or service supply created from or joining the value chain.