NEW LEGAL POLICIES OF LAW ON INVESTMENT 2019
The Vietnamese National Assembly (N/A) had recently passed the Law on Investment 2019 on June 17th 2020. The Law on Investment 2019, taking effect on January 01st 2021, will replace the Law on Investment 2014, which is amended and supplemented by the Law on Investment 2016. Through this paper, DTD will discuss new legal policies of Law on Investment 2019, including three notable points: (i) Sectors and trades banned from business investment; (ii) Investment incentives and supports; (iii) Investment procedures.
1. The removal of debt collection service from the list of sectors and trades subject to conditional business investment.
The first new point of Law on Investment 2019 is the disposal of the debt collection service from the group of sectors and trades subject to conditional business investment. This sector, instead, is codified into Article 06 of the Law 2019, treated as a sector that is prohibited from business investment. In fact, during the process of drafting Law on Investment 2019, the N/A members had argued two provisions for the management of debt collection service: Whether to ban the debt collection service or keep regulating it as a conditional business investment? As crimes related to debt collection service have strikingly increased in cities and provinces, the N/A should adopt new legislations banning this service. The authorities, however, shall have to deal with the disguised debt collection service after the Law on Investment 2019 has taken effect. Hence, Decrees and Circulars are necessarily provided to govern this issue.
2. The additional forms of investment incentives and supports.
With a view to encouraging investors in operation of investment projects, Article 15 of the Law on Investment 2019 supplements one form of investment incentives. In particular, investors will enjoy the preference of enterprise income tax and the increase in deducted expenses when calculating taxable incomes. Moreover, investment projects employing persons with disabilities or creative entrepreneurship are also added into group of subjects entitled to investment incentives. Meanwhile, newly founded investment projects or extended research and development centers or innovation centers whose investment capital is from 6,000 billion Viet Nam Dong, or investment projects focusing on significant sectors and trades whose investment capital is from 30,000 billion Viet Nam Dong, will enjoy special investment incentives and supports (Article 20 of the Law on Investment 2019).
3. Changes of investment dossiers and procedures.
In Law on Investment 2014, investors have to submit different dossiers for investment policy decision in case each investment project requires decisions of different authorities. Law on Investment 2019, however, amends this stipulation by aggregating dossier for investment policy decision in Article 33.01 for all investment projects required consent of the N/A, the Prime Minister, and the provincial-level People’s Committee. In addition, the Ministry of Planning and Investment shall be authorized to receive investors’ dossiers for investment projects required consent of the N/A or the Prime Minister. Especially, investment projects which shall submit dossiers for investment policy decision to the N/A, it takes 15 days, rather than 03 days according to the Law on Investment 2014, for establishment of a State Appraisal Council, after receiving a complete investment project dossier.
Furthermore, there are significant changes in investment procedures in form of contribution of capital to, and purchase of shares and capital contribution at, economic organizations. According to Article 26.03 of the Law on Investment 2019, foreign investors shall carry out procedures to register the contribution of capital to, or purchase of shares or capital contributions at, economic organizations in the following cases:
(i) The contribution of capital, purchase of shares and capital contribution, lead to the increase in ownership percentage of foreign investors in economic organizations running business subject to conditional market access for foreign investors;
(ii) The contribution of capital, purchase of shares and capital contribution, lead to the fact that foreign investors, economic organizations set out in point a, b và c of Article 23.01 of the Law on Investment 2019 own more than 50% charter capital of economic organization in the following cases: increasing ownership percentage of foreign investors from less than 50% to more than 50% and increasing charter capital ownership percentage of foreign investors when foreign investors have already owned more than 50% charter capital in economic organizations;
(iii) Foreign investors contribute of capital to, purchase of shares and capital contribution at, economic organizations who obtain land use right certificate in islands and communes, towns near border, seaside or other areas related to national defense and security.
The adoption of Law on Investment 2019 absolutely will attract FDI capital flow, instituting instructions of Resolution 50/NQ-TW of the Politburo of the Vietnamese Communist Party on advancing quality and effect in foreign cooperation. Also, Law on Investment 2019 will remove barriers in carrying out administrative procedures, improve the business investment environment, and stabilize the national economy after the Covid-19 outbreak.
