Issue 032022 – Application for approval of investment guidelines for foreign investors

Dear Valued Clients,

Law on Investment No. 61/2020/QH14 (the “Law”), which takes effect on January 1^st, 2021, supplements new regulations in a beneficial manner to investors, especially foreign investors, for the purpose of promoting investment activities in Vietnam, one of which is the provisions on approval of investment guidelines (AIG) by competent authorities for both domestic and foreign-related projects. ENT would like to send you the detailed analysis of the necessary dossiers and procedures for application of AIG.

The 2020 Law on Investment provides the definition of approval for investment guidelines as “a competent authority approving the objectives, location, scale, schedule and duration of a project; investor or form of selection of investor and special mechanisms or special policies (if any) to execute an investment project”[1]. This approach is regarded progressive and clear enough to help investors better understand the scope and limits of the approval for investment guidelines by competent authorities in the process of consideration and granting investment guidelines approvals.

Power to approve investment guidelines

According to the Law, competent authorities to approve investment guidelines are consisted of: the National Assembly, the Prime Minister and provincial People’s Committees[2]. Specific power of the above authorities is provided in Articles 30, 31 and 32 of the Law.

Application dossiers[3]

Foreign investors shall prepare the application dossiers for approval of investment guidelines as follows:

• • An application form for execution of the investment project, including a commitment to incur all costs and risks if the project is not approved;
  • A document about the investor’s legal status;
  • Document(s) proving the financial capacity of the investor including at least one of the following documents: the investor’s financial statements for the last two years; commitment of a parent company to provide financial support; commitment of a financial institution to provide financial support; guarantee for the investor’s financial capacity; other document proving the investor’s financial capacity;
  • Proposal for the investment project including the following main contents: investor or method of investor selection, investment objectives, investment scale, investment capital and plan for raising capital, location, duration and schedule of the investment project, information about the current use of land in the location of the project and proposed demand for land use (if any), demand for labor, proposal for investment incentives, impact and socio – economic efficiency of the project and preliminary assessment of environmental impact (if any) in accordance with regulations of law on environmental protection.
  • If the law on construction requires formulation of a pre-feasibility study report, the investor is entitled to submit the pre-feasibility study report instead of a proposal for the investment project;
  • If the project does not require the State to allocate or lease out land or to permit land repurposing, a copy of the document regarding the land use rights or other document identifying the right to use the location for execution of the investment project is required to be submitted;
  • Contents of the explanation for the technology to be used in the investment project if the project requires appraisal and collection of opinions on the technology in accordance with the Law on Technology Transfer;
  • The business cooperation contract if the investment project is executed under a business cooperation contract;
  • Other documents relating to the investment project, and requirements on the eligibility and capacity of the foreign investors, which includes but not limited to documents related to foreign ownership proportion, business lines, charter capitals etc. (if necessary).

Procedures for AIG

Procedures for approval of investment guidelines shall be conducted as follows:

Procedures for investment guideline approval by the National Assembly:[4]

Step 1: Foreign investors prepare the application dossiers and submit the dossiers to the Ministry of Planning and Investment.

Step 2: Within 15 days from the date on which the sufficient application is received, the Ministry of Planning and Investment shall submit a report to the Prime Minister and request establishment of a State Appraisal Council.

Step 3: Within 90 days from the date of its establishment, the State Appraisal Council shall organize appraisal of the application and prepare an appraisal report including the contents set out in Article 33 of this Law, then submit it to the Government.

Step 4: At least 60 days before the opening of the meeting of the National Assembly, the Government shall prepare an application for investment guideline approval and submit it to the National Assembly’s agency presiding over validation.

Step 5: The National Assembly shall consider passing a Resolution on approval for investment guidelines on the National Assembly session.

Procedures for investment guideline approval by the Prime Minister:[5]

Step 1: Foreign investors prepare the application dossiers and submit the dossiers to the Ministry of Planning and Investment.

Step 2: Within 03 working days from the date on which the sufficient application is received, the Ministry of Planning and Investment shall relevant documents to relevant regulatory agencies to seek their opinions about the contents specified in Article 33 of this Law.[6]

Step 3: Within 15 days from receipt of the written request for opinions, the requested agencies shall send their appraisal opinions on the contents under their management to the Ministry of Planning and Investment.

Step 4: Within 40 days from the receipt of the application, the Ministry of Planning and Investment shall appraise it and prepare an appraisal report including the contents specified in Article 33 of this Law, and then submit it to the Prime Minister for investment guidelines approval.

Step 5: The Prime Minister shall consider granting investment guideline approval for foreign investors.

Procedures for investment guideline approval by the provincial People’s Committees:[7]

Step 1: Foreign investors prepare the application dossiers and submit the dossiers to the investment registration authority (the Department of Planning and Investment).

Step 2: Within 03 working days from the date on which the sufficient application is received, the investment registration authority shall send relevant documents to relevant regulatory agencies to seek their opinions about the contents specified in Article 33 of this Law.

Step 3: Within 15 days from receipt of the written request for opinions, the requested agencies shall send their appraisal opinions on the contents under their management to the investment registration authority.

Step 4: Within 25 days from the receipt of the application, the investment registration authority shall prepare an appraisal report with the contents prescribed in Article 33 of this Law and submit it to the provincial People’s Committee.

Step 5: Within 07 working days from the receipt of the application and the appraisal report, the provincial People’s Committee shall grant the investment guideline approval, and provide a written explanation in the case of refusal.

As usual, we hope you find this Legal Article helpful and look forward to working with you in the upcoming time.

Kind regards,

ENT Law LLC

The full version of this Legal Article can be found here.

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[1] According to Article 3.1 of the Law.

[2] According to Article 30, 31, 32 of the Law.

[3] According to Article 33 of the Law.

[4] According to Article 34 of the Law.

[5] According to Article 35 of the Law.

[6] According to Article 33 of the Law:

Contents of appraisal of the request for investment guideline approval include:

• • Assessment of the conformity of the investment project with national planning, regional planning, provincial planning, urban planning and special economic – administrative unit planning (if any);
  • Assessment of the demand for land use;
  • Preliminary assessment of the socio-economic efficiency of the project; and preliminary assessment of environmental impact (if any) in accordance with regulations of law on environmental protection;
  • Assessment of investment incentives and conditions for enjoying investment incentives (if any);
  • Assessment of the technology to be used in the investment project if the project requires appraisal and collection of opinions on the technology in accordance with the Law on Technology Transfer;
  • Assessment of conformity of the investment project with the objectives and orientation for urban development, and residential housing development programs and plans; preliminary plan for phasing of investment with a view to synchronism assurance; preliminary structure of residential housing products and provision of land for social residential housing development; preliminary plan for investment in construction and management of urban infrastructure inside and outside the project in the case of an project on investment in construction of residential houses and urban areas;
  • Assessment of the suitability of the investment project with the requirements of protecting and promoting the value of cultural heritage and the conditions prescribed by the law on cultural heritage.

[7] According to Article 36 of the Law.