NEW HIGHLIGHTS ON INVESTING ACTIVITIES
TAKING EFFECT FROM JANUARY 1ST 2021
On June 17th 2020, the National Assembly approved the Law on investment No. 61/2020/QH14 (hereinafter referred to as “Law on investment 2020”) which comes into effect from January 1st 2021 and will take place the Law on investment 2014. In general, the new Law on investment has been enacted to enhance the quality and effect of attracting investment, which is suitable for developmental orientation of the industry. Especially, the Law on investment 2020 has more positive changes and detailed supplementary regulations on investing activities than that of the Law in force.
In this legal update, we reveal some of new highlights on investing activities in accordance with the Law on investment 2020.
1.Outward investment
- Business lines are forbidden for outward investment
This is an absolutely new regulation in comparison with the Law on investment 2014. In particular, the following business lines are not able to invest outside Vietnam:
- Business lines are banned from investment prescribed under the Law on investment 2020 and relevant international treaties.
- Business lines with technologies and products which are subjects banned from exporting in accordance with the law on foreign trade management.
- Business lines are prohibited from investment in accordance with the law of the host country.
- Conditional business lines for outward investment
From January 1st 2021, Vietnamese investors investing in foreign countries need to note the following business lines:
- Banking;
- Insurance;
- Stock;
- Press, publishment, television;
- Real estate trading.
In the near future, conditions for outward investment towards these business lines will be stipulated and guided in detail in laws and resolutions of the National Assembly, orders and resolutions of the Standing Committee of the National Assembly, decrees of the Government, and international treaties on investment that the Socialist Republic of Vietnam is the member.
- Invalidation of Outward Investment Registration Certificate
From 2021, the Outward Investment Registration Certificate will no longer be valid in case the investor fails to implement or is unable to implement the investment project in line with the schedule registered with the state management agencies within 24 months from the issuance date of the Outward Investment Registration Certificate, and fails to carry out the procedures for adjusting the execution schedule of the investment project (the Law in force stipulates 12 months).
2.Investment in Vietnam
- Business lines and conditions for market approach towards foreign investors
This is the new regulation. In general, foreign investors are able to apply the conditions for market approach prescribed as inward investors.
The Government will soon proclaim the List of business lines limited for market approach towards foreign investors, including:
- Business lines have not been approached the market;
- Conditional business lines for market approach.
Conditions for market approach towards foreign investors at the above List, including:
- Ownership ratio of the charter capital of foreign investors in economic organizations;
- Types of investment;
- Scope of investing activities;
- The qualification of investors and partners implementing investment;
- Other conditions in accordance with laws and resolutions of National Assembly, orders and resolutions of the Standing Committee of the National Assembly, decrees of the Government and international treaties on investment that the Socialist Republic of Vietnam is the member.
- Conditions for foreign investors to establish economic organization in Vietnam
When establishing economic organization in Vietnam, foreign investors have to satisfy the conditions for market approach as specified in Section 2.1 above.
In addition, from January 1st 2021, before establishing an economic orgnanization, the foreign investor do not need to either have an investment project or follow the issuance or adjustment procedures of an investment registration certificate when founding small and medium-sized start-up enterprises and start-up investment funds in accordance with regulations of the law on supporting small and medium-sized enterprises.
- The ratio of foreign investors to hold the charter capital in economic organization implementing investment activities
The new Law on investment has amended the ratio of foreign investors to hold the charter capital to over 50%, instead of at least 51% as stipulated in the current Law.
- Conditions for foreign investors to contribute capital, purchase shares and contributed capital of the economic organization in Vietnam
For the first time, the Law on investment 2020 stipulates conditions that foreign investors have to satisfy to be able to contribute capital, purchase shares and contributed capital of the economic organization in Vietnam, including:
- Satisfy the conditions for market approach set out in Section 2.1;
- Ensure the national defense and security in accordance with the Law on investment 2020;
Comply with regulations of the law on land about conditions for receipt of land use rights and conditions for using land in border islands, communes, wards, town and coastal communes, wards, town.
Other documents
INVESTMENT
- Prime Minister’s Decree No. 2007/QD-TTg in 2020 on approval of the Scheme on assignment, management, usage and exploitation of aviation infrastructure invested and administrated by the State
(Effective date: December 7th 2020)
ADMINISTRATIVE – JUDICIARY
- Ministry of Home Affairs’ Decision No. 1032/QD-BNV in 2020 about the regulation on archival and clerical work
(Effective date: December 1st 2020)
- Decision No. 2044/QD-NHNN in 2020 proclaiming the amended and supplemented administrative procedures in the field of banking establishment and activities performed at the One-stop Department under the management of the State Bank of Vietnam
(Effective date: December 28th 2020)
- Ministry of Home Affairs’ Official Correspondence No. 6459/BNV-CCHC in 2020 guiding on the construction and report of periodic administrative reforms in 2021
(Effective date: December 7th 2020)
FINANCE – BANKING
- The State Bank of Vietnam’s Circular No. 16/2020/TT-NHNN amending the Circular No. 23/2014/TT-NHNN guides the opening and usage of a payment account at Bank Payment Service Suppliers
(Effective date: March 5th 2021)
- Ministry of Finance’s Decision No. 1927/QD-BTC in 2020 about the declarement of the estimated state budget in 2021
(Effective date: December 3rd 2020)
- General Department of Taxation’s Official Correspondence No. 5189/TCT-CS in 2020 introducing new contents of Decree No. 126/2020/NĐ-CP guiding the Tax Administrative Law
(Effective date: December 7th 2020)
LABOR
- Ministry of Labor – Invalids and Social Affairs’ Notice No. 4875/TB-BLDTBXH in 2020 on the days-off of Tet Holiday and Independence Day in 2021 for officials, civil servants and employees
(Effective date: December 10th 2020)
