Opinions still vary about if it is necessary to keep the Investment Law. However, all agree that the Investment Law has shown a lot of problems.

All agree that the Investment Law has shown a lot of problems.

Six years ago…

In fact, the question about whether Vietnam should have an investment law was raised six years ago, when the Ministry of Planning and Investment was drafting the law. At that time, some experts once tried to dissuade the National Assembly from enacting the law.

The issue was once so burning that Dr Nguyen Dinh Cung, the then Head of the Macro Economy Division under the Central Institute of Economic Management (CIEM), an arm of the Ministry of Planning and Investment (MPI), dared to express the viewpoint which was contrary to that of his superior - MPI’s Minister. He frankly said that no need to have an investment law, because Vietnam already has the other laws which stipulate the relating issues.

Fearing that the investment environment may get worse, the three chambers of commerce of US, Australia and Eurocham sent a letter to the National Assembly’s Economics and Budget Committee, proposing not to ratify the investment law draft. They said that the bill may have very negative impacts on the business climate and the national economy in Vietnam.

Just before the National Assembly discusses the ratification of the law in November 2005, the Vietnam Chamber of Commerce and Industry VCCI still organized a workshop in a last effort to persuade policy makers to change their mind.

However, all the efforts were in vain, because policy makers kept another viewpoint on the issue. The Minister at that time of MPI, Vo Hong Phuc, the head of the compilation committee promised that the law will comprise the provisions which allow to simplify investment procedures. Dr Nguyen Dinh Tai, a member of the compilation committee, also said that businesses would “gain more than lose”. Hoang Thanh Phu, Member of the National Assembly’s Economics and Budget Committee, stated that there is no reason to stop the law.

And the Investment Law was ratified by the National Assembly on November 29, 2005.

… and now

As warned before, the 2005 Investment Law has shown a lot of problems. Experts have pointed out that the law makes both state management agencies and businesses confused.

Phan Duc Hieu, a senior economist from CIEM, said that there are too many overlapping provisions that need to be removed or amended. The regulations, according to Hieu, do not generate more values to the state management agencies and the society, but put difficulties for enterprises.

In order to implement an investment project, investors have to follow the procedures for investment registration or investment examination to obtain investment license. During the process, investors have to explain different issues relating to the land use right, the construction and environment treatment measures. Meanwhile, after getting investment licenses, investors still have to repeat the same steps as required by the specialized laws.

Dr Le Net from LCT Lawyers has pointed out that the required procedures have forced investors to “come in through the back doors”. Meanwhile, many investors decide to leave Vietnam for the countries where they believe the investment environment is better.

Keeping or removing?

Most of experts have asked to reconsider the Investment Law. Hieu said that the investment law still needs to exist, but it should be rewritten on the basis of progressive views of point. 

Some others believe that the law should be replaced by an investment encouragement law, where the state focuses on setting regulations on the investment policies and investment encouragement, or driving investment to the important fields.

Lawyer Tran Thanh Tung from P&P Law Firm, said that 70-80 percent of the content of the current investment law should be removed, while only the most important issues should be preserved. However, Tung believes that the existence of an investment law is a must. 

Meanwhile, Nguyen Quoc Vinh from Tilleke&Gibbins believes that it would be better to remove the investment law. The two most important issues in investment encouragement are the land and tax incentives. Meanwhile, the two issues can be found in the land law and tax law already.

Source: TBKTSG