According to Hong Sun, vice chairman of the Korea Chamber of Business in Vietnam, the revision of the law will be one of the key highlights in 2019 as it is expected to allow relaxing the foreign ownership limit for investors so that they will have more room in buying joint stock companies, joint ventures or state-owned enterprises.
With continuous improvement in the investment environment to facilitate investors and businesses, the revised law will also create good conditions for foreign investors to join the Vietnamese market, Hong Sun said, adding it will help Vietnam attract more technology-focused and environmentally friendly capital flows, including those from South Korea.
According to Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), after more than three years in effect, the Law on Investment has made improvements to business and investment, thus improving the business climate. However, there remain some shortcomings in the laws that need to be amended to align with the new development period.
The revised law will focus on supplementing the list of conditional business lines to create a fair business environment for all enterprises, cutting costs by intensifying administrative reforms, and increasing business autonomy in line with international practices, as well as increasing efficiency in co-operation in business and investment management between central and local agencies, the Ministry of Planning and Investment said.
A highlight amendment to the Law on Investment draft, which has released recently, is cutting 22 conditional business lines and amending others.
This revision is also aimed to perfect basic concepts of investment and business, conditional business lines, and investment conditions for foreign investors, among others. It also proposes to remove several projects which currently have to submit investment plans to the prime minister for approval.
These projects have a total investment capital of at least VND5 trillion (US$217.39 million) and include projects which investment and business conditions are regulated specifically in international treaties and other relevant legal documents such as foreign-invested projects in shipping, telecommunications services with network infrastructure, media, and 100 percent foreign-invested sci-tech enterprises.
Furthermore, the principle of non-retrospective effect for investment conditions will be supplemented for cases where changes of legal documents and policies are incompatible with the investment conditions included in their investment registration certificates.
The supplementation aims to help Vietnam fully comply with the World Trade Organization (WTO)’s regulations.
More changed needed
Despite the significant amendments, there are a ¬number of issues that still ¬concern businesses and law firms which are urging the drafting board of the law to make modifications.
According to lawyer Nguyen Kim Dung, head of legal and government relations of Apollo Vietnam, the Law on Investment has yet to clarify the term ‘foreign investor.’
In ¬particular, Article 23 is unclear on how much capital is needed to be called a foreign ¬investor, thus causing confusion for both investors and agencies granting licenses.
This lack of clarity causes unhealthy competition among foreign investors, while under the WTO’s commitments, Vietnam has yet to open up to foreign-invested enterprises in preschool education, Dung said.
Nguyen Van Toan, vice chairman of the Vietnam Association of Foreign Invested Enterprises, proposed the law should have significant changes to make it more attractive to high-tech investors, limiting low-tech investment and boosting the cooperation between foreign and local firms.