Comparison: Investment inside vs. outside an industrial park/industrial cluster in Vietnam

As Vietnam is on its way to become a new global manufacturing hub, many investors now consider the country as a new destination for their manufacturing business. However, finding the right location to implement the proposed project may be a vexed question.

In general, the following options are available for the investor:

  • Option 1: Acquisition of land inside industrial manufacturing-oriented zones, which include industrial park (IP) and industrial cluster (IC); and

  • Option 2: Acquisition of land outside the industrial manufacturing-oriented zones.

In this article, we discuss and compare the available options based on specific criteria and from both legal and practical perspectives to assist investors in making their best decision.

With respect to the industrial manufacturing-oriented zones, the law distinguishes between IP and IC based on certain criteria. In addition, the legal frameworks applied to investment in the IP and IC may sometimes be different. Accordingly, doing investment inside the IP and IC will be discussed separately as two potential options, where applicable.

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New Decree On Industrial Zone In Vietnam

On 28 May 2022, the Government issued Decree 35 on management of industrial zones (IZ) and economic zones (Decree 35/2022) to replace Decree 82/2018 on the same matters (Decree 82/2018). Decree 35/2022 will be in effect from 15 July 2022.

Decree 35 introduces several significant changes as compared with Decree 82/2018 which are expected to create a more simplified legal framework for investors making investment in IZ projects.

1. New models of IZ

Decree 35/2022 introduces two new models of IZ, including:

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ACCOMMODATION SERVICE BUSINESS WITHIN AN INDUSTRIAL ZONE

To satisfy the actual demand of those working in industrial zones (IZs), recently, more and more investors are exploring possibility to do the accommodation service business (e.g. hotel, condotel, officetel, …) (Accommodation Business) within IZs.

There is however no clear legal basis under Vietnamese laws for the Accommodation Business to be conducted within an IZ. This is because:

a) Decree 82/2018 on IZs prohibits people from residing in the industrial zones, except for foreigners being managers, chief executive officers, and experts who can temporarily reside in an enterprise located within the IZs subject to the satisfaction of certain conditions. For instance:

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New Amendments To Investment Law, Enterprise Law, Electricity Law, Residential Housing Law and Other Laws

On 11 January 2022, the National Assembly passed a new law amending 09 laws, including Public Investment Law, Public-Private Partnership Law, Investment Law, Residential Housing Law, Tendering Law, Electricity Law, Enterprise Law, Law On Special Consumption Tax, and Law On Civil Judgment Enforcement (Law 03/2022). Law 03/2022 will come into effect on 1 March 2022. In this post, we will discuss some new key points of Law 03/2022.

1) Enterprise Law 2020

Change of the term “members of the Members’ Council” into “members of the company”

As discussed before, the Enterprise Law 2020 (Articles 49 and 50) only provides for the rights of members of the Members’ Council, but not the rights of the members of the LLC. And many rights of the members of the Members’ Council should be the rights of the members of the LLC such as rights to subscribe for new capital increase or to receive dividends paid by the LLC. The change of the term “members of the Members’ Council” into “members of the company” in Articles 49 and 50 has successfully resolved this problem, although in other provisions, the Enterprise Law 2020 still does not distinguish between the positions of members of the LLC and members of the Members’ Council of the LLC.

Removal of requirement on signatures of dissenting members on meeting minutes; personal liability of the chairperson and the person writing the minutes

The requirement that meeting minutes of the Members’ Council must include signatures of members who disagree to pass such meeting minutes is now removed.

In addition, in the event that the chairperson of the meeting of the Members’ Council/Board Of Directors or the person writing the minutes refuses to sign the meeting minutes, for such minutes to be effective, the Enterprise Law 2020 no longer requires all attending members of the meetings to sign, and only the signatures of the attending members who agree to pass the minutes are necessary. Also, in such event, the chairperson or the person writing the minutes who refuses to sign such minutes must bear personal liability for any loss arising to the company due to their refusal.

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