Decree on Guiding Investment Law Yet to be Issued

According to the many enterprises and business associations, as well as experts, there are unclear definitions such as ‘100 per cent foreign-owned enterprise,’ ‘enterprise with 100 per cent foreign investment capital’ and enterprises with 100 per cent of their own investment capital’ in the draft decree guiding the implementation of the Investment Law. Usually, all enterprises are 100 per cent owned by investors, but during their operation, they can borrow money. Therefore, what are norms for these enterprises to be classified?

 

Lawyer Tran Huu Huynh, head of the Legal Department of VCCI, said that the concepts ‘foreign-invested project,’ ‘locally-invested project,’ ‘foreign investor’ and ‘local investor’ had unclear relations. For example, projects may be developed by local investors, who may mobilise capital from foreign sources. What will the projects be called; ‘Foreign-invested projects’ or ‘locally-invested projects’?

 

In the meantime, some concepts have been wrongly used, not suitable with the existing legal system. For example, the concept ‘Foreign-invested joint stock company’ (Article 12) is not stipulated in the Enterprise Law. The regulation is discriminatory in terms of ownership. Even paragraph two, Article 36, which states: ‘Salary of workers shall be negotiable between investors and workers in line with the regulations of the law on labour...’ conflicts with the law on labour, because entity in the law on labour is enterprise but not investor.

 

Dr Dinh Van An, director of the Central Economic Management Institute, said that in the content of the draft decree, there were many unclear regulations on investment procedures. For example, paragraph 4, Article 64, stipulates ‘For projects developed in education and training, health, banking and insurance, investors shall have to deposit and buy customer insurance, except for those cases, which have been stipulated by other legal regulations.’ According to legal consultants, the regulation is unreasonable because when projects are reviewed and evaluated, they have not been formed yet and enterprises may not have been formed yet, so investors do not have any ground and cannot buy customer insurance. Articles 67-70, which stipulate that enterprises shall have to submit between eight and ten files of documents to State agencies, are also unreasonable. State agencies should be connected with each other to help investors save time and money.

 

Furthermore, many inputs and comments stated that the draft decree did not predict emerging situations and lacked feasibility. It contained overlaps while its tables were unclear. For example, when developed, a project with capital of less than VND 15 billion (or VND 300 billion) but due to objective reasons has been changed to have capital of over VND 15 billion (or VND 300 billion). How will it now be addressed? What consequences would there be if it cannot be addressed? Which State agencies will grant business registration certificates if foreign-owned enterprises are bought by Vietnamese individuals or enterprises, and vice versa?

 

According to the evaluation made by the Prime Minister Research Commission (PMRC), even though the Investment Law has taken effect and investors are waiting for an early issuance of a guiding decree, what investors ask for from the decree include clear and transparent guidance, ensuring the spirit and main principles of the Investment and Enterprises Laws. Pham Chi Lan, member of PMRC, said: "It is necessary to issue the decree for the implementation of the Investment Law. However, it is impossible to ignore quality requirements due to time pressure. The decree may be issued late but has to have a good quality, to meet requirements of investors and making a contribution to creating a more favourable and open business environment. This is the final target of the decree."