Laws and guiding decrees bringing comfort to investors

By Vaibhav Saxena Lawyer Vietnam International Law Firm

Following the enforcement of the Law on Investment 2020, the draft decree guiding implementing certain provisions of the law has been released. When the draft decree is passed by the government, it will replace Decree No.118/2015/ND-CP guiding implementation of the Law on Investment 2014.

The draft decree consists of seven chapters and 93 articles, which provides guidance on the implementation of the new law.

It includes key legal considerations, such as guidance on procedure of online submissions for investment registration; clarification on sectors which foreign investors are restricted from accessing and sectors for which market access is conditional to them; requirements to meet in order to enjoy investment incentives; guidance on investment security deposit for the implementation of projects; new regulations on the amendments of the project; and termination of ventures based on forged transactions. New business lines are eligible for funding incentives.

Regarding the draft decree guiding the new Law on Enterprises 2020, Decree No.01/2021/ND-CP on enterprise registration has recently been issued, providing detailed instructions and guidance.

There are four key legal considerations of Decree 01: the enterprise code is now also the code of units participating in social insurance of an enterprise; and cases of granting enterprise registration certificate are in accordance with contingency procedures (for example in case the national business registration system breaks downs or is updated).

Thirdly, the fee for publishing the enterprise registration content is refunded if the enterprise registration certificate is not issued to the enterprise. Lastly, the legal status of an enterprise is to be clearly stated in the National Business Registration Database (for instance not operating at the registered address).

Together with the draft decrees, following enforcement of the Law on Public-Private Partnership (PPP) Investment 2020, the draft decree guiding and implementing certain provisions of the Law on PPP has been released.

The draft decree in this provides noteworthy guidelines and options for interpreting the law, including some key legal considerations:

- PPP investment eligible sectors and minimum scale;

- The definition of “policy” in the context of PPP project development, which is used to determine change-in-law events where an investment policy decision must be amended;

- Draft options to be considered for compensation in cases where the project is terminated or halted due to the transition from the previous PPP regulations (meaning Decree No.63/2018) to the new law on PPP.

Since Decree 01/2021 has just taken effect at the beginning of 2021, and the draft decrees guiding the Law on Investment and the law on PPP are still in their draft forms, we may have to wait some time to see the actual impact these legal documents may have on the investment landscape in Vietnam.

However, one of the most remarkable achievements we have at present is that, finally, we have one unified investment legal framework for investors to follow, especially in the PPP sector.

The new law on PPP and the draft decree will act as the key piece of legislation governing related transactions in the country. They will have, for the first time, codified provisions on PPP projects at the legislative level, unified the current patchwork of laws into a standalone legislative instrument, and replaced the previous legal framework, which consisted of numerous outdated circulars, decrees, and decisions.

This change will surely bring prosperous impacts to the investment landscape in Vietnam, in light that the lack of one unified legal framework has undoubtedly presented risks to foreign investors, thereby lowering the attractiveness of such transactions in Vietnam.

Regarding the new decree on enterprise registration and the draft decree guiding the Law on Investment, they have successfully addressed some of the shortcomings existing in the old legal frameworks and other relevant regulations, providing more clarity and straightforward investment procedures.

These changes will bring more comfort to prospective foreign financiers who wish to pour money into Vietnam but are unfamiliar with the country’s legal landscape.