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The shortcomings of the Investment Law 2005

The shortcomings of the Investment Law 2005

The shortcomings of the Investment Law 2005

The shortcomings of the Investment Law 2005. In the broadcast business and law on the Voice of Vietnam (VOV), Lawyer Nguyen Thanh Ha, the law firm S&B (S&B Law) discussed about the shortcomings of the Investment Law 2005, we respectfully submit to you the interview content:
Reporter: The Investment Law was enacted in 2005 had a positive impact on the development of the business community, however, after more than 7 years of implementation existing many limitations, shortcomings such as regulations of investment procedures, transfer investment projects .... So Sir, what are limitations, shortcomings primarily in the Investment Law 2005?

Lawyer Nguyen Thanh Ha: Highlight shortcomings are asynchrony between the Investment Law and the Enterprise Law; and specialized law Acts makes several major investment provisions of the Investment Law can not be implemented in practice.

Example:
1. Understanding the foreign investors, which has the inconsistency between foreign investment law and other legal documents:
Investment Law, Article 3, Section 5 explains concepts:

Foreign investor means any foreign organization or individual using capital in order to carry out an investment activity in Vietnam.
In particular, the provisions of the Investment Law stipulate:
- The foreign investors firstly investing in Vietnam are foreign investors invested economic organizations established for the first time in Vietnam.
- Foreign investors are organizations and individuals invest capital to carry out investment activities in Vietnam.
- For enterprises with foreign owned capital, the Investment Law is now determined by foreign investors set up to carry out investment activities in Vietnam, Vietnam enterprises by foreign investors purchasing of shares, merger or acquisition. Foreign investors are applied conditions as domestic investors in the case of Vietnam investors owning 51% of the charter capital of the enterprise or more.
However, other laws provide interpretation inconsistently with the Investment Law, specifically:
- Decree 69/2007/ND-CP the regulations, foreign investors including "foreign organizations" are "organizations established under foreign law and operate business in the country outside or / and in Vietnam. "
- Decision 121/2008/QD-BTC identified, including foreign investors' organizations established and operating under the laws of Vietnam with 100% foreign capital contribution affiliates of this organization."
- Decision 55/2009/QĐ-TTg, foreign investors including "organizations established and operating in Vietnam with the participation of foreign capital contribution of over 49%."
- Decree 102/2010/ND-CP states: "Unless the international treaties to which Vietnam is a member or specialized law stipulated otherwise, the enterprise established in Vietnam's own foreign investment does not exceed 49% of charter capital applied investment, enterprise conditions as domestic investors...".

2. The Investment Law allows Vietnam individuals invest offshore with offshore investment procedures. However, after being certificated foreign investment, Vietnam individual can not transfer foreign currency abroad to carry out investment activities in foreign countries. Because the legal documents of the foreign exchange management have no specific guidelines.
 
3. The Enterprise Law and the Investment law don’t have a synchronicity in stipulating about the case of foreign investors purchase capital contributions of domestic investors or Vietnam investors purchase capital contributions of foreign investors. This shortcoming leads to the local situation does not perform the same. Hanoi City stops receiving records capital transfers like this. Ho Chi Minh City is still recognized in the Registration but more binding rules: enterprises must carry out procedures for investment registration / verification. However, there is no mechanism to control or handle if they are not carried out procedures on investment actually.

4. Regarding evaluation of investment projects: It spends a lot of time doing business and discourages foreign investors. The examining time is long, so the business opportunities are missed.
There are some shortcomings of the Investment Law 2005, hopefully in the near future, lawmakers will study and modify the rules accordingly.
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