The answer is a qualified “yes”. It is possible to mortgage an investment project under Vietnamese law because:

·         The Investment Law 2020 allows an investor to assign (chuyển nhượng) an investment project in whole and in part. And Decree 31/2021 implementing the Investment Law 2020 expressly provides for the procedures when an investment project is assigned as a result of the enforcement of a security interest including a mortgage.

·         Decree 21/2021 on secured transactions expressly provides the investor of an investment project can mortgage an investment project to the extent such investment project is not prohibited from assignment by the investment regulations. Decree 99/2022 on registration of secured transactions also provide for specific procedures to register a mortgage over investment projects which use land such as residential housing, other construction works, agriculture and forestry development.

·         In practice, it appears that it is common for banks to take mortgage over investment projects.

However, there is a theoretical qualification to the above answer which comes from the legal nature of an investment project. Under the Civil Code 2015, an investment project must first qualify as a type of property (tài sản) so that it can be mortgaged or used as security for an obligation. Property under the Civil Code 2015 includes objects, money, valuable papers and property rights. If an investment project does not qualify as a property then in theory it cannot be mortgaged.

The Investment Law 2020 defines an investment project as “a collection of proposals” for the expenditure of medium or long-term capital in order to conduct business investment activities in a specific geographical area and for a specified duration. So on the face of it, an investment project is not an object and nor a valuable paper. In addition, it is difficult to say that a collection of proposal could be considered as property rights (quyền tài sản). In fact, Decree 21/2021 seems to distinguish an investment project and property rights arising from an investment project (e.g., right to manage or develop an investment project).

This post is written by Nguyen Quang Vu.