Loud foreign investment warning

Under a Ministry of Planning and Investment’s Foreign Investment Agency (FIA) recent notice, Lao premier recently enacted an instruction saying that it stopped considering and granting new investment projects for mineral extraction  and exploitation and planning rubber and eucalyptus on a national scale.

The move is to review the implementation and quicken pace of licenced projects. Time for temporary cessation in new licence provision will be from June 11, 2012 to the end of December 31, 2015.

Similarly, on May 7, 2012 the Cambodian premier enacted a decree stipulating that Cambodian government would temporarily halt allocating land for planting rubber. Accordingly, no further land area will be given to such projects until December 21, 2015.

Later in September 4, 2012 Cambodia delivered a notice on stopping wood extraction in allocated land areas hosting perennial forests except getting the government approval such as using woods to build houses for war invalids or for police in areas near the border lines.

These new policies may directly affect Vietnamese outbound investments in these two countries, according to FIA. In fact, the Cambodian government recently looked into land allocations and land lease to foreign investors, including Vietnamese investors. It argued that a vast project land has hosted perennial forests.

In this context, the MPI urged local businesses with outbound investments in Laos and Cambodia to scale up efforts to strictly observe their projects’ progress and targets and abide by Vietnamese and host country’s laws.

“This is to shield investors’ legitimate interests and avert legal risks to their projects,” according to a FIA source.

In respect to cash crop projects, Vietnamese investors were urged to carefully study land allocation procedures in the host country to ensure their projects’ legitimacy, in the meantime they should gather and keep relevant documents associated with the costs of materials and commodities they brought from Vietnam to Cambodia and Laos to protect their interests.

“The Vietnamese Investors Associations in Laos and Cambodia and Cambodia need to bring forth their supporting role to help projects run smoothly and timely detect difficulties Vietnamese investors face and deliver petitions to competent agencies in Laos and Cambodia to support investors,” said the FIA, citing that the Vietnam Rubber Industry Group needed to review entire investment projects planning rubber and cash crops under contracts signed between Cambodia Ministry of Agriculture, Forestry  and Fisheries and Vietnamese businesses.

The move was to ensure the implementation of a memorandum of understanding signed between Vietnamese government and Cambodian and Lao counterparts covering investment cooperation in planning 100,000ha of new rubber areas.