A foreign investor who wishes to set up a new company in Vietnam for a residential housing project in Vietnam may need to follow two different licensing routes depending on whether the project will require an in-principle approval under the investment regulations (Investment In-principle Approval)

If an Investment In-principle Approval is required then the key licensing steps for the foreign investor would be:

• Step 1: obtaining the Investment In-principle Approval under the investment regulations which will also serve as an in-principle approval under the housing regulations (Housing In-principle Approval);
• Step 2: obtaining an Investment Registration Certificate to register an investment project (Investment Certificate); and
• Step 3: obtaining an Enterprise Registration Certificate to incorporate the project company (Enterprise Certificate).

Under the investment regulations, a residential housing project will need an Investment In-principle Approval, if:

• the housing project involves relocation and settlement of 10,000 people or more in mountainous areas and 20,000 people in other areas;
• the housing project has an investment capital from VND 5,000 billion or more and does not comply with applicable master plans; and
• the housing project (i) involves direct allocation or lease of land by the Provincial PC without going through the auction or tender process, or the receipt of transfer of land use right or assets attached to land, or (ii) involves a change of land use purpose; except for cases where the housing project is located in an economic zone and complies with relevant master plans.

If an Investment In-principle Approval is not required then while the law is not clear, the key licensing steps for the foreign investor are likely to be as follows:

• Step 1: obtaining an Investment Certificate to register an investment project;
• Step 2: obtaining the Enterprise Certificate to incorporate the project company; and
• Step 3: obtaining the Housing In-principle Approval, if it is required under the housing regulations. In practice, the investor may need to provide the documents required for the Housing In-principle Approval at step 1.

The second scenario (i.e. no Investment In-principle Approval) usually happens when the foreign investor can directly obtain land use right by way of capital contribution from a local partner or acquiring an existing housing project from a local developer.

In the first scenario, the housing regulations expressly provides that if a housing project requires an Investment In-principle Approval then there is no need to obtain Housing In-principle Approval. In the second scenario, it is not clear under the housing regulations whether the  Housing In-principle Approval should be obtained before or after the Investment Certificate. This is because:

• On the one hand, under housing regulations, only companies incorporated in Vietnam can implement a housing project. This suggests that the Housing In-principle Approval will be issued after the Enterprise Certificate is issued; and
• On the other hand, Article 9 of Decree 99/2015 provides that before implementing a residential house construction investment project (dự án đầu tư xây dựng nhà ở), a Housing In-principle Approval is required. This suggests that Housing In-principle Approval is issued before the Investment Certificate is issued.

The first interpretation seems to be more reasonable since it is consistent with the intention of the investment regulations that the Investment Certificate is only the necessary (but not the sufficient) condition to implement an investment project and after the Investment Certificate is issued, investors still need to comply with specific laws (e.g. housing law or law on import/distribution by foreign investors). In addition, implementing a residential house construction investment project mentioned under Article 9 of Decree 99/2015 could refer to preparing project dossier according requirement of the construction laws (including appraisal and approval of construction designs).

This post is contributed by Nguyen Bich Ngoc, an associate at Venture North Law.