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Investment regulations revisited
The Ministry of Planning and Investment and the Viet Nam Business Forum held a conference in late January to discuss the draft decree intended to replace Government Decree No 108/2006/ND-CP, which regulates a number of provisions in the Law on Investment.
Decree 108, which was issued in 2005, is an important component of the legal structure governing foreign investment. But, in the years since, a number of shortcomings have arisen which must be addressed to more efficiently apply investment preferences and improve the quality of State administration of investments.
Among the new provisions in the draft decree is one which would allow overseas Vietnamese to opt for either investment procedures applicable to foreign investors or those for Vietnamese investors. This change would allow overseas Vietnamese to enjoy the same investment preferences as domestic investors. For example, overseas Vietnamese investors would be able to register their projects via a business registration process instead of having to go through the more complex process to obtain an investment certificate.
Article 3A of the draft decree states that the agencies responsible for issuing investment certificates for industries and sectors not already governed by other regulations must first consult the Ministry of Planning and Investment and related ministries to request the Prime Minister's approval of the proposed investment.
This change is designed to address difficulties which have arisen in the past when a foreign investor has sought to invest in a field not expressly regulated elsewhere or mentioned in Viet Nam's WTO commitments. However, there is concern amongst lawyers that, in practice, this provision would do little to speed up the investment process due to the length of time it usually takes to obtain a prime ministerial approval. A better appoach would be to permit investors to enter any line of business not specifically forbidden by law.
Under Article 9.5 of the draft decree, operational offices of foreign parties to a business co-operation contract would no longer be able to register a seal, open a bank account, hire employees, sign contracts or otherwise conduct business.
Article 10.1 would provide that investors which contribute capital, buy shares or acquire a business pertaining to an investment project would be required to fulfill business registration and investment certification procedures. This wording gives the impression that all such transactions trigger compulsory re-registration and this is not the case under the current regulations. Some capital contributions and share transfers should not require re-registration. Therefore, in order to avoid confusion, it might be helpful if the provision stated that such investors would fulfill business registration and investment certification procedures only if required by the laws on enterprises and invesment and their regulations.
Article 25.3 of the draft decree would require the investor's entitlement to preferential corporate income tax and import-export rates to be specifically stated on the business registration or investment certificate. This is a welcome change as it protects the rights of investors to preferential tax rates. But, in order to be truly efficient, the draft decree should include a provision requiring the revision of the list of sectors and geographical areas entitled to investment incentives to ensure uniformity with similar lists found in corporate income tax regulations.
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