Investment certificates to be ditched

The Ministry of Planning and Investment has signalled its intention to end the widespread use of investment certificates.

The abolition of investment certificates represents another step in streamlining the administration of foreign direct investment (FDI). Minister for Planning and Investment Bui Quang Vinh told the first Vietnam Business Forum (VBF) dialogue held in Ho Chi Minh City last week that the ministry was committed to cutting paperwork to the minimum needed to manage the FDI sector effectively.

He added that during earlier exchanges with foreign businesses held throughout the country, many foreign-invested enterprises (FIEs) supported the idea of abolishing the certificate, but surprisingly others were keen to maintain the practice as they believed the paper could help them receive investment incentives, access bank loans and rent land. The abolition of the investment certificate is currently included in the draft Investment Law set to be passed this year.

Despite these views, the Ministry of Planning and Investment (MPI) has confirmed it was committed to the abolition of the certificate except in four cases – sensitive areas of the economy such as banking, projects likely to use huge amounts of land, potentially polluting investments and those that need the paper to receive investment incentives.

“But in the future, even these four exceptions would be governed by other laws, so the certificate will no longer be necessary,” Vinh told the dialogue, attended by central government authorities and provincial officials in southern Vietnam.

VBF co-chairman Vu Tien Loc said the representatives of the authorities attending the forum were responsible for driving through reforms to further improve the business environment.

Co-chairing the VBF dialogue with Minister Vinh, Ho Chi Minh City People’s Committee Deputy Chairman Le Manh Ha said the southern economic hub was vigorously pushing reforms in granting investment certificates but difficulties still hindered the efforts.

Ha said the first problem arose from the consultation process with ministries, during which the city administration had either been ignored or had received contrary advice. Other difficulties included additional procedures, lack of regulations, inconsistencies between different laws, and investors delaying the providing of supplementary documents.

The average time spent processing FIEs’ applications for investment certificates in Ho Chi Minh City reached 58 days last year.

Ha said the longest period it had taken to issue an investment certificate last year was 257 days, and the shortest just a day. He added the city received 2,218 applications last year, and admitted the number of delayed applications was very high.

“From this dialogue onward, Ho Chi Minh City People’s Committee will ask for consultation from ministries only in cases stipulated in legal documents. We won’t bother when the law doesn’t specify any need,” Ha said, adding the city would administer FIEs through an ID code using a database.

Minister Vinh said other city’s and provincial governments should follow Ho Chi Minh City’s example.