CONSULTING WITH MINISTRIES FOR UN-COMMITTED BUSINESS LINES WHEN IMPLEMENTING THE INVESTMENT PROCEDURES - THERE ARE STILL MANY PROBLEMS

05/03/2019, 11:18 AM

On 11 January 2007, Vietnam officially became a member of WTO, remarked Vietnam’s international economic integration process. On the basis of negotiations, Vietnam opened the market to WTO members of the service sectors as stipulated in the Schedule of Specific Commitments on Services between Vietnam and members of WTO (“WTO Commitments”).

After more than 10 years of becoming an official member of WTO, Vietnam’s economic situation has made profound changes. According to the General Statistics Office[1], the total gross domestic product (GDP) in the fourth quarter of 2018 increased 7.31% compared to the same period of last year. GDP of 2018 increased by 7.08%, the highest increase since 2018 and earlier[2].

Besides the remarkable economic progress, the situation of signing bilateral and multilateral international treaties is quite exciting. Up to November 2018, Vietnam has participated in negotiating and signing 16 Free Trade Agreements (“FTA”)[3]. In which, 10 FTAs ​​have taken effect, with more favorable policies for member countries: AFTA (1993), ACFTA (2003), AKFTA (2007), AJCEP (2008), VJEPA (2009), AIFTA (2010), AANZFTA (2010), VCFTA (2014), VKFTA (2015), VN-EAEU FTA (2016); 02 FTAs ​​signed but not yet valid: AHKFTA (11/2017), CPTPP (03/2018); 01 FTA has ended negotiations but has not signed: EVFTA (02/2016); 03 FTAs ​​under negotiation: RCEP (starting negotiations 3/2013), Vietnam - EFTA FTA (starting negotiations in May 2012), Vietnam - Israel FTA (starting negotiations in December 2015).

It is undeniable that the WTO Commitment and Vietnamese international treaties are members that have opened markets for many service sub-sectors. However, with the current world economic growth speed, the committed service sectors have not met the increasingly diversified investment needs of investors.

Currently, the investment on un-committed business lines under WTO Commitments, and other international treaties the laws of Vietnam do not have any regulations on investment conditions for foreign investors must “consult with the Ministry of Planning and Investment and the Management Ministry for consideration and decisionbased on Article 10.2 (dd) of Decree 118/2015/ND-CP.

Although there are regulations on “consulting”, but specific guidance on the procedures, the term of procedure resulting is still unclear. Each investment registration authority in each province has different understandings because there are no official regulations.
From the perspective of the consultant, the author presents some following problems:

Firstly, the cases must be “consulting”

According to Article 10.2 (d) Decree 118/2015/ND-CP, service sectors and sub-sectors which must consulted with the Ministries when making investment registration if they satisfy two conditions:

  1. Being un-committed or not prescribed in WTO Commitment; and
  2. Being un-committed or not prescribed in other international treaties on investment, on which, the laws of Vietnam do not have any regulations on investment conditions for foreign investors.

(hereinafter referred to as the “Un-committed Business Lines”)

Where a foreign investor is entitled to implement Un-committed Business Lines and those Un-committed Business Lines have been announced on the National Foreign Investment Web Portal, the investment registration authority shall consider and decide on the foreign investor’s investment in the same business lines without consulting with Ministries.

In practice, inspite of the issuance of Investment Registration Certificate for many Un-committed Business Lines (The consolidated work of those business lines is prescribed in Annex 2 attached to Official Letter No. 6193/BKHDT-DTNN dated 03 September 2015), if those business lines are not announced on the National Foreign Investment Web Portal, the investment registration authority will have to “consult” with Ministries.

In our opinion, it is recommended to build a consolidated work of the Un-committed Business Lines and announce them on the National Foreign Investment Web Portal in order to simplify the investment procedure, facilitate the investment of foreign investors on the Un-committed Business Lines.

Secondly, term for the “opinion”

Article 6.4 of Decree 118 prescribed that: “While following administrative procedures for investment, the enquired agencies shall give opinions about the investment project within the term specified in the Law on Investment and this Decree. If an agency does not make any opinions within the term, it is considered that it concurs with the content of the investment project under its management.”

However, since there is no particular regulation on the “consulting” procedure, it usually lasts from 1 to 2 months, causing many obstacles for foreign investors in implementing investment projects in Vietnam. Especially, they have to pay the monthly rent for the location, but cannot implement the project due to the issuance of the Investment Registration Certificate as a prerequisite license.

In order to create more favorable conditions for investors, it is recommended to specify the term for ministries to give opinion on the Un-committed Business Lines. Past the prescribed term limit, if the Ministries have no opinions, the project is considered as being agreed.

Thirdly, the approvals of Ministries

Since there is no particular regulation on the “consulting”, in practice, the investment registration authority only issues the Investment Registration Certificate for the Un-committed Business Lines if being approved by all of “consulting” Ministries.

It is recommended to specify the way of resolution in case of having inconsistent opinions between Ministries.

In conclusion, to continue to become a country attracting foreign investment, in our opinion, during the term of obtaining opinions for building Amendment Draft to the Law on Investment and the Law on Enterprises, lawmakers should have regulations to simplify investment procedures, create favorable conditions for foreign investors.

 

[2] Increasing GDP in several years: In 2008 increased 5.66%; 2009 increased 5.4%; 2010 increased 6.42%; 2011 increased 6.24%; 2012 increased 5.25%; 2013 increased 5.42%; 2014 increased 5.98%; 2015 increased 6,68%; 2016 increased 6.21%; 2017 increased 6.81%; 2018 increased 7.08%

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