Six new points of Law on investment 2014 in Vietnam

Six new points of Law on investment 2014 in Vietnam

Law on Investment 2014 will go in force from 01 July 2015 and replaces Law on investment 2005 in Vietnam. Six new points of Law on investment 2014 compared with Law on investment 2005 are noted as follows:Six new points of Law on investment 2014 in Vietnam

1. The first new point of Law on investment 2014 in Vietnam:

 Business investment concept is used to replace the concept of direct investment and indirect investment. Thus, since Law on investment 2014 takes effect, it is no longer a distinction between direct investment and indirect investment.

2. The second new point of Law on investment 2014 in Vietnam:  Industries and trades in which business investment is prohibited (Article 6). The following business investment activities are prohibited:

(a) Business in drugs prescribed in Appendix 1 to Law on investment 2014;
(b) Business in chemicals or minerals of types prescribed in Appendix 2 to Law on investment 2014;
(c) Business  in  specimens  of  wild fauna  or  flora  included  in  Schedule  1  of  the  Convention  on International  Trade in  Endangered Species and specimens of species of endangered and rare  wild fauna or flora in Category 1 with the natural origin as prescribed in Appendix 3 to Law on investment 2014;
(d) Business in prostitution;
(dd) Purchase or sale of humans, tissues or parts of the human body;
(e) Activities relating to asexual reproduction;
This clause is a step in institutionalizing Article 33 of the Constitution " Everyone has the right to conduct business freely in the sectors and industries not prohibited by law” and affirmed in Article 5 of the Law on investment 2014 that investors the right to make business investments in sectors and industries where the law does not prohibit.

3. The third new point of Law on investment 2014 in Vietnam: List of 267 industries and trades in which business investment is conditional is provided in Appendix 4 to Law on investment 2014.

4. The fourth new point of Law on investment 2014 in Vietnam:  Implementation of investment activities of economic organizations with foreign owned capital (Article 23):

An  economic  organization  must  satisfy the  conditions  and  carry out  investment  procedures  in accordance  with regulations  applicable  to  foreign  investors  upon  investment  for establishment  of  an economic organization; investment in the form of capital contribution or purchase of shares or portion of  capital  contribution  to  an  economic  organization;  or  investment  on  the  basis  of  a  BCC contract in any one of the following cases:
(a) 51%  or  more  of its  chapter  capital  is  held  by a foreign  investor(s), or  a  partnership  has  a majority  of  partners  being  foreign  individuals in  respect  of economic  organizations  being  a partnership;
(b) 51%  or  more  of  its  chapter  capital  is  held  by an economic  organization(s)  prescribed  in paragraph (a) of this clause;
(c) 51%  or  more  of  its  chapter  capital  is  held  by a foreign  investor(s)  and  an  economic organization(s) prescribed in paragraph (a) of this clause.

  In comparation to the Law on investment 2005, any foreign investors who invest directly in Vietnam shall conduct investment procedures regardless small or large rate of stake. This is new to ease investment procedures for foreign investors.

  Otherwise, previously, if a foreign investors who buy shares of Vietnamese enterprise over 51% of its charter, such enterprise is still considered Vietnamese enterprise. Now under the Investment Law in 2014, this case should conduct investment procedures of foreign investors.

5. The fifth point of Law on investment 2014 in Vietnam: Domestic investment and investment projects of economic entities not subject to the provisions in paragraph 4 above shall not perform investment registration procedures.

6. The sixth point of Law on investment 2014 in Vietnam: Shorten the time for issuance of investment registration certificate.

- The duration of the investment registration certificate for projects subject to the investment policy decisions (Article 37) is five working days from the date of receipt of the written decision of investment policy; also for other projects is 15 working days from the date of receipt of complete file.
- The duration of amendment of the investment registration certificate is 10 working days from the date of receipt of complete files (Article 40).
The duration of issuance of the investment registration certificate in Law on investment 2014 was reduced significantly as compared with the Law on investment 2005. However, in reality, the current process of issuance of investment registration certificate, the investors are granted investment registration certificate in time prescribed by law is not easy.

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