Tuesday, May 12, 2015

Vietnam intends to closely supervise FDI projects’ progress

A draft version for a new decree intended to replace the current Decree on supervising and evaluating investment (No. 113/2009/ND-CP) has been publicized by Vietnam Ministry of Planning and Investment to obtain public opinions. What’s new in the draft? The intended new decree shall not only govern state-owned investment as previously but also cover the FDI and PPP sectors also. If approved and passed, the new decree would be an import legal instrument that foreign investors in Vietnam shall have to pay attention to.

According to the draft, foreign investors shall have to regularly send reports to relevant authorities describing the status of their investment projects, including

1.  Progress of Business Registration (according to the new Law on Investment, foreign investors shall have to apply for Business Registration after obtaining an investment certificate; in another word, an investment certificate shall no longer serve also as a Business Registration as per the Investment Law promulgated in 2005 which is going to expire in the next few months),
2.  Project implementation status and project’s goal implementation status.
3.  Progress of investment capital contribution, charter capital contribution and legal capital contribution, if any,
4.  Project operation status: business operation results, labour and employment, investment for R&D, enterprise’s financial status and the status of other criteria dependent on the specific industrial sector of each enterprise,
5.  The observation of legal requirements on environmental protection, land use, and use of natural resources,
6. The observation of regulations stated in the investment certificate and letter of approval of investment policy (if any),
7. The observation of the conditions set forth for investment projects of the conditional sectors.
8.  Status of investment incentives exercise.

Meanwhile, relevant authorities shall closely supervise FDI projects in the following aspects,

a) The implementation of the provisions in the investment certificate;
b) Progress of the project, including charter capital contribution, legal capital contribution, investment  capital disbursement, loans obtaining and progress of the project objectives.
c) The observance of the regulations on environmental protection, land use, use of natural resources;
d) The fulfillment of conditions for investment, conditions to be eligible for investment incentives and the implementation of the commitments promised by the foreign investors (if any);
e) The observance of the legal provisions regarding taxes, labor, insurance, foreign exchange management, construction, fire fighting and prevention;
e) The observance of the provisions on supervision and evaluation of investment and statistical reporting regime as regulated;
g) The execution of the rulings on discovered issues.

It’s still unknown how the draft decree would be revised after obtaining the public opinions and when it will be officially promulgated. However, there is high possibility that the new decree would be issued in concurrence with the time the new Laws on investment and enterprises of Vietnam are effective in July 2015. 

The main theme of "tightening" in the decree may not be changed so much since authorities see the need to closely and strictly supervise the status of FDI projects in Vietnam, under the circumstances of many reports on long  and wasteful delayed projects after obtaining the license and the land which authorities find complicated to revoke the license and deal with the consequences. 

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