After months of delay, the long-awaited Decree 118/2015 implementing the Investment Law 2014 was finally issued on 12 November 2015. Set out below are certain important points of Decree 118/2015:
- Decree 118/2015 introduces a definition of “investment conditions for foreign investors” (điều kiện đầu tư đối với nhà đầu tư nước ngoài). The definition helps to distinguish general investment conditions applicable to all investment projects from investment conditions for foreign-invested projects. In addition, it may also help to clarify that sectors which Vietnam undertakes to impose no conditions for foreign investors will not be considered as sectors subject to investment conditions for foreign investors. Currently, sectors which Vietnam undertakes to impose no conditions for foreign investors can still be considered sectors subject to investment conditions for foreign investors and require lengthy licensing procedures.
- If an application submitted to the licensing authority under the Investment Law 2014 includes a foreign-language document then there must be a Vietnamese translation or version of the document and the Vietnamese translation will be used for licensing purpose. This is a positive change compared to Decree 108/2006. Under Decree 108/2006, the Vietnamese version of a document in an application submitted to the licensing authority will prevail the English version. In practice, many licensing authorities have relied on Decree 108/2006 to reject contracts or charters included in applications submitted to them if these contracts or charters provide that the English versions prevail the Vietnamese versions in case of inconsistency.
- A licensing authority is now required to set out all requests regarding an application submitted to it in one single response. In addition, if a Ministry is required to opine on an application under the Investment Law 2014 and fails to respond within a fixed time limit then such Ministry is deemed to have agreed with the application. These requirements would certainly help reducing the licensing time for an investment project.
- If a foreign investor has been licensed in a service sector which is not included or committed in the WTO Commitments of Vietnam then the licensing authority may allow other foreign investors to invest in the same sector without obtaining opinions from other Ministries. It seems that for the first time Decree 118/2015 introduces “licensing precedent” under this provision.
- Decree 118/2015 introduces various mechanism to make licensing procedures and conditions more transparent. For example, a national portal will be set up to include all licensing and investment conditions for all investors and for foreign investors. An online licensing mechanism is also set up.
- Investors of an investment project using land will need to enter into a deposit agreement with the licensing authority whereby monies deposited by the investor will be used to ensure timely implementation of the investment project. This is actually an implementing provision of the Land Law 2013 rather than the Investment Law 2014.
- When a foreign investor applies to set up a new company to implement an investment project, the initial charter capital of the company does not need to be equal to the investment capital of the project. It appears that this provision is to allow a foreign investor to have more time to contribute the investment capital of a project instead of 90 days only under the Enterprise Law 2014.
- When a foreign investor applies to set up a new company to implement an investment project, after being incorporated, the project company will be considered as the investor of the investment project. If the project company is considered as the only investor of the project then it may remove the need to amend the Investment Certificate if there is a change in the shareholders/members of the project company. Under Investment Law 2005, a change in the shareholders/members of a project company is regarded as a change in the investor of the investment project and requires amendment to the Investment Certificate.
- A foreign investor acquiring shares or capital contribution in an existing company will not need an Investment Certificate and will only need to comply with acquisition registration procedures under Article 26 of Investment Law 2014. In addition, if other special laws (e.g. import/trading regulations) require an application to include an Investment Certificate but under the Investment Law 2014, an Investment Certificate is not required then the investor is not required to submit an Investment Certificate. This is a helpful clarification since in certain provinces, the licensing authority has started asking for a foreign investor acquiring shares or capital contribution in an existing company to obtain an Investment Certificate on top of the acquisition registration.