MoF backs reforms to cut red tape for overseas investment

At a seminar hosted by the Vietnam Association of Foreign-Invested Enterprises (VAFIE) on September 26, experts highlighted the draft Law on Investment being compiled by the Ministry of Finance. The proposal is among 47 draft laws scheduled for submission and debate at the National Assembly’s 10^th session, signalling a major shift in the policy environment for enterprises.

Hoang Manh Phuong, deputy director general of the MoF’s Legal Department

A total of 47 draft laws are slated for submission, debate, and approval at the 10^th session of the 15^th National Assembly. Among them are several aimed at spurring investment and business activity, including the draft Law on Investment prepared by the Ministry of Finance (MoF).

"The draft law introduces wide-ranging reforms and reflects the government’s determination to move beyond the outdated mindset of ‘if you can’t manage it, ban it.’ The focus is on fostering growth, supporting production, and reducing costs for both citizens and enterprises," said Phan Duc Hieu, member of the National Assembly’s Committee for Economic and Financial Affairs.

Hoang Manh Phuong, deputy director general of the MoF’s Legal Department, presented the reform highlights of the new draft, which is set to replace the current Law on Investment, emphasising the creation of a level playing field for both domestic and foreign investors.

The draft law proposes removing 20 conditional business sectors and industries, including accounting service business, tax procedure service business, rice export, temporary import and re-export of frozen food products, trading and activities directly related to goods trading by foreign service providers in Vietnam.

"These 20 sectors do not meet the criteria for conditional business lines as specified in Article 7 of the current Law on Investment," said Phuong. "These areas can be shifted from pre-licensing (pre-check) management to post-licensing (post-check) oversight, thus upholding the freedom of business for individuals and enterprises."

The draft law also promotes decentralisation in investment policy approval. Under Articles 27 and 28, it defines the authority for approving investment policies as belonging only to the prime minister and provincial-level people's committee chairpersons. All projects that previously required approval by the National Assembly, would now fall under the prime minister’s authority, accelerating procedures.

However, for major projects requiring special mechanisms or policies not yet defined in law, the prime minister may approve the investment policy after obtaining consent from the Standing Committee of the National Assembly.

"The MoF will continue reviewing the draft law in relation to other relevant laws like the Railway Law, the Electricity Law to ensure consistency and compatibility across the legal system," he added.

Phuong also highlighted a key reform in the draft law is the handling of outbound investment procedures. The drafting composers proposed two options. Option one is to abolish outbound investment procedures entirely, shifting to a foreign exchange management model under the State Bank of Vietnam (SBV).

Option two is simplifying procedures by eliminating the requirement for investment policy approval (previously under the authority of the National Assembly and the prime minister). Only projects with investment capital from VND20 billion ($800,000) or more would require an Outbound Investment Registration Certificate. Projects under this threshold would only need to register foreign exchange transactions with the SBV to transfer money abroad.

"The MoF supports the first option, and the draft law is being developed in line with this approach," Phuong said.

He explained that outbound investors use private capital and comply with the laws of the host country. Yet, under the current mechanism, Vietnamese agencies still approve aspects such as form, scale, location, timeline, and capital sources – seen as restrictive and confusing in defining what falls under Vietnamese law versus the host country’s jurisdiction.

"The main issue," Phuong noted, "is that outbound investment essentially involves transferring funds abroad. Once the money leaves Vietnam, enforcing investor responsibilities is difficult, making the existing approval system both impractical and limiting."

"Eliminating these procedures would encourage outbound investment by Vietnamese enterprises, particularly in promising markets such as Laos, Cambodia, and Africa," he added.

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