EnglishOn March 26, 2021, the Government of Vietnam issued Decree 31/2021/ND-CP detailing and guiding the implementation of the Law on Investment 2020 (Law No. 61/2020/QH14) with the scope of adjustment and specific applied objects.
This Decree details and guides the implementation of a number of articles of the Law on Investment 2020 on business investment conditions, business lines and market access conditions for foreign investors; ensure investment in business; investment incentives and support; foreign investment activities; investment promotion; State management over business investment activities in Vietnam and investment abroad.
SOME HIGHLIGHTS FOR NOTE
1.The list of industries and trades with restricted market access for foreign investors is officially promulgated as follows:
• Foreign investors are not allowed to invest in 25 industries that have not been able to access the market according to the regulations promulgated together with this Decree: Trading in goods and services on the list of goods and services performed exclusively state in the field of commerce, etc.
• The list of industries and trades with conditional market access for foreign investors includes 59 items. If they choose to invest in industries and trades other than these 84 industries, foreign investors will be entitled to the same market access conditions as domestic investment regulations.
2. Additional objects in the industries eligible for investment incentives include:
• Investing in research and production of biotechnological products used as food;
• Manufacturing wooden products; manufacturing artificial boards, including: plywood, jointed boards, MDF boards;
• Investing in development, operation and management of technical infrastructure works for industrial clusters;
• Investing in facilities to support gender-based violence prevention in the community for sex workers;
• Investing in making use of waste heat to generate electricity from building material production facilities in order to save energy and protect the environment, etc.
Currently, the number of industries eligible for investment incentives under the new regulations are: Science and technology, electronics, mechanics, material production, information technology (20 industries and trades); Agriculture (11 industries and trades); Environmental protection, infrastructure construction (23 industries and trades); Education, culture, society, sports, health (09 industries and trades); Other industries and trades(04 industries and trades).
3. Conditions on total downtime of investment projects must not exceed 12 months. In case the time limit expires from the date of shutdown, the investment registration agency shall terminate or terminate part of the operation of such investment project.
4. Terminating the operation of an investment project in case the investor conducts investment activities on the basis of fake civil transactions in accordance with the civil law; Termination of operation of investment projects according to court judgments, decisions or arbitration awards
WHAT SHOULD INVESTORS DO TO AVOID RISKS?
Foreign investors need experts and lawyers good at economic and market law because these are the best risk managers who will advise investors to avoid possible risks.
• Learning from market history: Investors need to be flexible in their portfolios and portfolios need to be diversified, not just focusing on one area. One of the most successful and painless ways is to learn from the history and experience of previous generations to create realistic expectations for your investments. Price fluctuations can happen every year, but the reality is that it won't be repeated in the long run.
• Determining the investment time: Successful investors always know how to determine the investment time before implementation because clearly defining the investment time will help investors decide where to invest in to fit their goals.
For the State, the State’ authorities in Vietnam have also implemented policies and measures to limit risks for investors. Specifically, on April 26, 2016, the Multilateral Investment Guarantee Agency (MIGA) and the State Bank of Vietnam (SBV) coordinated to organize a seminar on "Solution to reduce risks for investment projects in Vietnam”.
According to Ms. Karin Finkelston, Vice President of MIGA, strengthening guarantee policies for investment projects as well as other guarantee organizations and companies will help investment projects in Vietnam avoid risks in foreign and local currency conversion, overcome limitations in capital movement abroad, and limit risks when breaking contracts.
* Please refer to the Law on Investment 2020 (Law No. 61/2020/QH14) here.
