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Investors reproach stringently-applied laws
Economists argue that rigid regulations deter investment in Vietnam and that local authorities should be more flexible in applying laws if they want to lure more investors.
Dat Sach Ben Tre Joint Stock Company has petitioned the decision to revoke the license of one of its investment projects at An Hiep Industrial Zone in Ben Tre province.
The company received their investment license in January 2007 and obtained land allocation the following month. The first phase of the project began on November 30, 2007.
The economic downturn occurred while the company was conducting necessary tasks to implement the project. Material prices unexpectedly skyrocketed (cement increased by 30 percent, steel by 50-80 percent), upsetting the company’s planned budget. The construction contractors abandoned the project.
As a result, Dat Sach Ben Tre asked permission and received approval to extend the project deadline to June 30, 2009.
According to Vo Thi Minh Nguyet, Chairwoman of Dat Sach Ben Tre, on June 2, 2009, Ben Tre authorities unexpectedly revoked the company’s investment license.
Explaining the decision, provincial authorities stated that the company did not meet project commitments because they are not financially capable.
Meanwhile, Nguyet argued that her company arranged enough capital and that she can prove the company’s financial capability.
“If we have the right to continue the project, our project will bring effects soon,” Nguyet asserted. “If the land is given to other investors, they will have to start from scratch.”
The project is just one of many in Vietnam found to be progressing slowly.
According to Nguyen Gia Huy Chuong, a lawyer with P&P Law Firm, the world’s economic crisis over the last two years has had a big impact on investment projects in Vietnam and difficulties in capital arrangement have delayed a lot of plans.
Chuong observed that “laws are always glacial” and that local authorities seem to be too rigid in dealing with delays. Citing current laws, authorities decide to revoke investment licenses as soon as they see projects slow down. Yet, as Chuong pointed out, the laws actually stipulate that project licenses can be revoked if there are not legitimate reasons for delays.
He characterized the regulations as “vague” and difficult to follow. Will the global financial crisis be considered as a legitimate reason for delays? Will delays due to procedural tardiness by government agencies and absent infrastructure also be considered as valid reasons?
In case of Dat Sach Ben Tre, Nguyet revealed that provincial authorities approved their land allocation on February 6, 2007, but necessary road work was completed only in December 2008 and the waste treatment system is still not finished.
“It is unfair to investors for the authorities to force them to go ahead with projects while the infrastructure is missing,” Nguyet noted.
“The State should share difficulties with investors and help them to overcome obstacles. If authorities mechanically apply the laws, they push investors into even more problematic situations,” Chuong remarked.
vietnamnet, tbktsg
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