Amending Law on Investment

On 17 June 2020, Vietnam’s National Assembly passed the amended Law on Investment which will take effect on 1 January 2021. The Law basically applies to both domestic and foreign investors. Key points of the amended law include among others: - A business organization is deemed as a "foreign investor" if such investors hold 50% or more of the charter capital (the current law stipulates 51%). In case the business organization is a partnership, the majority of the general partners/members must be foreigners. - Before foreign investors can establish a business organization, they must have identified an investment project and obtain an Investment Registration Certificate for that project. The latter is not required for investors engaging in the establishment of a small and medium-sized creative start up or fund for such start up. - Market access conditions for foreign investors are the same as for domestic investors, except for industries and business that do not allow for such market access reciprocally or those that come with conditions on foreign investors. The Government will announce a list of the above-mentioned industries and business before 1 January 2021. The list will cover topics such as ownership of charter capital, investment form, scope of investment activities, evaluation of investors’ capacity and partners participating in the investment activity. - Foreign investors can reap the benefits of various business guarantees, including a guarantee on investment in case of change in laws, guarantee of property ownership, guarantee on investment activities and guarantee on the right to transfer assets abroad. - Disputes between foreign investors and the State can be taken to international arbitration, provided that the contract between the parties includes such clause or international treaties to which Vietnam is a signatory. Disputes between investors, of which at least one party is a foreign investor as defined by the Law, can be taken to foreign or international arbitration with no attached conditions. - The Government has added more types of investment incentives, such as: Exemption from import tax on goods imported to create fixed assets; Exemption or reduction of land use levy, land rent, land use tax; Quick depreciation, increased deductible expenses when calculating taxable income. - The Government has added more business lines eligible for investment incentives, covering preservation of drugs, manufacture of medical equipment, university education, and manufacture of products to the list of industries prioritized for development such as new materials, new energy, clean energy, renewable energy, products with 30% or more added value, energy-saving products, waste collection, waste treatment, waste recycling and waste re-use.

• Type:

  • Entry and establishment (Ownership and control)
  • Treatment and operation (Dispute settlement)
  • Promotion and facilitation (Investment incentives)

• Sources:

  • Lexology, Vietnam - new law on investment proves the government’s effort to attract foreign direct investment, https://www.lexology.com/library/detail.aspx?g=336b853c-4d41-45da-8115-07a14c2b5f58&utm_source=Lexology+Daily+Newsfeed&utm_medium=HTML+email&utm_campaign=Lexology+subscriber+daily+feed&utm_content=Lexology+Daily+Newsfeed+2020-08-27&utm_term=, 25 Aug 2020
  • Vietnam Briefing, Vietnam Adopts Amended Law on Enterprises and Law on Investment, https://www.vietnam-briefing.com/news/vietnams-adopts-amended-law-on-enterprises-and-investment.html/, 07 Jul 2020