Fresh opportunities for foreign investors to emerge with new decree

November 08, 2010 | 08:59
The Ministry of Finance this month will complete steps to summarise final comments before final submitting to the government for a decree on betting business.

      Under the draft decree, the state allows three operations, betting on horse racing, dog racing and on sports. In respect of sports betting, the state allows betting on foreign football championships, such scope of business shall be expanded from the time to time according to results of the government’s research.

     This decree shall make a legal basis for the establishment and operation of enterprises doing business on betting, and enterprises which are doing business on betting under certificates issued before the issue of this decree. However, in respect of the foreign investor, there are some matters in this decree which need to be considered and improved as follows.

Firstly, the decree has no clear provisions stating that foreign investors are allowed to establish a foreign-owned company doing business on betting. Meanwhile, under the World Trade Organization’s commitments on services, Vietnam has not committed to this investment sector.

We believe that the foreign investor shall have to take time to conduct the procedure to obtain advance ruling from the government in order to know they can do so or not. Secondly, under the decree, the Ministry of Finance (MoF) shall consider from time to time to issue a list of foreign horse racing and dog racing championships which are allowed to do betting business, thus it is very difficult to set up a suitable business plan without such a list.

Thirdly, the maximum betting rate per person in a day shall not be more than VND1 million and may be adjusted by the MoF from time to time. We believe that at trial level,  the maximum betting rate should not be controlled.

However, based on the maximum betting rate as stated above, it will probably be an issue of consideration for foreign investors’ investment decisions by the reason that this maximum betting rate has not been actually desirable for attracting overseas Vietnamese and foreigners to participate in this area.

Fourthly, the draft stipulates that the investors have to complete the procedures for being granted investment certificates, the dossiers shall be evaluated by the MoF and other relating ministries before being submitted to the government for its decision.

However, the draft decree does not regulate the period for these procedures and hence the investors cannot know the issuance period for preparing appropriate business plans.

This is also matter that makes many foreign investors who invest in other fields discreet because they have to consume plenty of time for administrative procedures although, for such other fields, investment law does have regulation of specific period for each procedure.

Besides, the establishment of horse race and dog race areas also have to comply with the planning criteria promulgated by the government, whilst the draft decree does not regulate the time of promulgating such planning criteria.

Fifthly, similar to other decrees, many contents in the draft decree only regulate in general level with the guideline nature. Hence, the investors have to wait for the promulgation of a circular on detailing and guidelines to have the actual ability to set up business which can operate in this area.

In short, the decree on betting business is a big step for Vietnam in putting the betting activities into the legal framework for management. We should think that businesses established in this area will contribute to cleaning up betting activities in Vietnam and contribute a considerable tax to the state’s budget.

However, in terms of investors as well as foreign investors, the draft decree still contains certain limitations derived from the experimental nature and characteristics of the decree, in other words, derived from the guidelines nature of the decree.

We believe that, in order to actually attract foreign investors to invest in this area, apart from having to continue studying and perfecting some of the contents of the draft decree, issuing government’s planning for the investment to create dog racing and horse racing area, the MoF needs to swiftly issue a circular on detailing and guidelines to solve the gaps of the decree.

>>Fair bet on sports betting to arrive

Nguyen Xuan Thuy - Associate at LCT Lawyers

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