on decree 31/2021 implementing investment law 2020

on Decree 31/2021 implementing Investment

Law 2020

M.A. TRỊNH THỊ THÚY HẰNG

LEGAL SERVICES

MINISTRY OF PLANNING AND INVESTMENT

I. STRUCTURE OF THE DECREE

09 Chapters

132 Articles

3 Appendices:

List of business lines with restricted market access for foreign investors

List of business lines eligible for investment incentives

List of areas with investment incentives

II. THE ESTABLISHMENT PROCESS OF THE DECREE

Decision No.1109/QĐ-TTg:

- Decree detailing the Law on Investment;

- Decree regulating the outward investment;

- Decree on investment promotion;

- Decree on investment supervision and evaluation;

- Decree regulating projects of national significance.

Resolution No. 149/NQ-CP:

- Decree No. 31/2021/NĐ-CP;

- Decree No. 29/2021/NĐ-CP.

III. MAIN CONTENT

1. Application of the Law on Investment and related law

2. Business lines, investment sectors with limited market access to foreign investors

3. Investment incentives and support

4. In-principle approval of investment and issuing the IRC

5. Adjusting investment projects

6. Capital contribution, purchasing shares, contributed capital

7. Ensuring the implementation of the investment projects

8. Operational duration of the investment projects

9. Appraisal of the investment value

10. Suspension of the investment projects

11. Termination of the operation of the investment projects

12. Terms of execution

III. MAIN CONTENT

1. Application of the Law on Investment and related laws (Article 4 of the Law on Investment)

- In respect of the laws issued before the effective date of the Law on Investment

+ Regarding business lines that are prohibited from investment or subjected to conditional business investment

+ Regarding the order and procedures (except for 10 laws, note: Law on Construction, Housing and Real Estate Business)

- In respect of laws issued after the effective date of the Investment Law

Determining the specific content of what to do or not to do as detailed in the provisions of the Law on Investment

2. Business lines, investment sectors with limited market access to foreign investors

Business lines banned from investment

(8 industries and professions, including debt collector services)

Business lines subjected to conditional business investment

(decreased from 243 to 227 business lines)

Business lines with restricted market access for foreigninvestors (Appendix I Decree 31/2021/NĐ-CP)

+ Business lines with prohibited market access (25);

+ Business lines with restricted market access (49).

Entities subjected to the List and conditions for restricted market access

•1. Foreign investors;

•2. Economic organizations specified at Point a, b and c, Clause1, Article 23 of the Law on Investment, including organizationswith:

over 50% of the charter capital held by foreign investors

over 50% of the charter capital held by all economicorganizations specified in point a

over 50% of the charter capital held by foreign investors andeconomic organizations specifed at Point a.

Principles for applying the List and conditions for market access

Cross off list

Business lines withprohibited

marketaccess

Prohibited from investment

Business lines with restricted market access

Conditions must be met

Domestic law newly issued: (i) granted access before the law => proceed as before; (ii) new investment, M&A, amended =>

comply; (iii) after the law=> comply

Uncommited

Sectors

Domestic law: (i) no restriction => have the

same market access as that of Vietnamese

investors; (ii) restrictions available => comply


Source of the conditions (Art. 9)

Int’l Treaties

BITMIT

(ACIA,..)FTA

Law, Congressional

resolutions

Law, Res. of the Standing

Committee of the National Assembly

Decrees


Restricted ownership percentage

Foreign investors of

different nationalities:

Total ≤ highest per./a international

treaty/a specific industry;

Foreign investors of

the same nationality::Total ≤ per. applied to

those investors as specified in

the international

treaty;

Business lines with different

ownership per.: ≤ per. of the industry

with the lowest

restrictions.

Enterprises subjected to

Law on Security:

According to Law on

Security;

3. Investment incentives and support

Entities entitled to the investment incentives:

Special investment incentives and supports;

Production and sale of products developed from scientific and technology researches;

Creativity and innovation;

Supplement of some sectors from the Law on SMEs.

The principle of Incentivized investment

Subjected to a period

Guarantee to meet the conditions for incentives during the period of applicableincentives.

4. In-principle approval of investment and investor selection (jurisdiction);

Multi-purpose project: approved by the highest authority

Prime Minister

5000 billion; video

games with rewards;

airports of 1 million tons

or above, seaports of

class I 2,300 billion VND

Housing (sort by hierarchical scale)

Projects operating in more than 02

provinces

Provincial People's

Committee

Land (except for that of

Households and individuals)

Housing (sort by hierarchical scale)

Golf course

The FDI project proposes to allocate or lease land to change the land use

purpose in islands, coastal communes and border areas; Other security and

defence area

Types of In-principle approval of investment

In-principle approval

of investment

In-principle approval of

investment (without the investor)

Auction

Bidding

Investment policy (the investor being approved)

Investor

DPI

Management

board

Prime Minister

MPI

OR

DPI

MINISTRIES,

PROVINCIAL

PEOPLE’S

COMMITTEES

Policy decision

IC

MINISTRIES, SECTORS

PROVINCIAL PPL

COMMITTEE

DEPARTMENT

Provincial People’s

commitee

AUCTION

BIDDING

INVESTORS

SELECTION

RESULT

Poli

cy d

ecis

ion

2

3

5

5

6

6

1

1

6

6

4

(No auction or bidding) (auction or bidding)

PROVINCIAL

PPL’S

COMMITTEE

APPROVAL

(POLICY) SELECT INVESTORS

The procedure of In-principle approval for investment

INVESTORS/

MINISTRIES/

PROVINCIAL PC

MPI

40 days

3 days

3

Foreign investors5 days

IC (in case the policy has investors)

Prime Minister

Provincial PC/

Ministries

(if relevant)

15 days

7 days

4

2

1 1

5

Make a

proposal

Inv. Approval

decision

INVESTOR SELECTION

ORGANIZATION

Selected investors

Select investors

IRC

5 days

Inv. Approval

decision

The process of in-principle approval for investment of the Prime Minister

The process of in-principle approval for investment of the Provincial People’s Commitee

INVESTORS/

MINISTRIES,

DISTRICT PC,

MANAGEMENT

DPI,

INDUSTRIAL PARK

MANAGEMENT

25 days

3 days

3

FOREIGN

INVESTORS5 days

IC (in case the policy has investors)

PROVINCIAL PC

Ministries

(if relevant),

District PC

15 days

7 days

4

2

1 1

5

Make a

proposal

Decision on

investment policy

INVESTOR SELECTION

ORGANIZATION

SELECTED

INVESTORS

Select investors

IRC

5 Days

Decision on

investment policy

Conditions for granting the

IRC

Not belong to the banned sectors;

Possessing a project address (with documents on the land use rights, location

agreement)

Conform with national, regional, provincial or urban, special administrative unit planning.

Investment per employee, Investment per m2(The provincial People’s Committee

shall submit and People’s Councils shall pass).

Market access conditions applied to foreign investors.

Granting the Investment Registration Certificate

Adjustments

Supplimentary acquisition, consolidation , full

division, partial division, ,…

07 cases to adjust the in-principle approval

Objective; land area (10%, 30ha), location;

Capital (≥20%, scale);execution

schedule (≥12months); duration;

technology;investor

Adjusting the execution schedule of no more than

24 months, with the exception of 6 cases.

Force majeure; delay allocation; delay in

administrative procedures or request

from regulatory agency; gov changing the master plan; changing, adding,

objective; increase capital (≥20%, scale

project)

5. Adjustment of the Investment Project

Transfer of investment projects

Con

dit

ion

s

Not subjected to Article 48.1, 48.2

Foreign investors satisfying Article 24.2 ( M&A condition)

Law on land;

Law on real estate trading and law on housing (for housing project, land project)

Investment guidelines or the investment registration certificate or other regulations

Law no 69/2014/QH13 (state-owned enterprises).

Pro

ced

ure

s:

Comply with A 41 Investment Law;

Comply with Enterprises Law, Housing and land law (other projects).

Pow

er t

o

all

ow

th

e tr

an

sfer

of

real

esta

te

pro

ject

s (A

75.2

.b):

Comply with Enterprises law (A 29.4 and investment registration certificate).

Other projects: (i) Provincial People’s Committee (Provincial project); (ii) PM (project subjected PM investment decision);

6. Capital contribution, purchase of shares, repurchase of

capital contribution

Registration

capital contribution or purchase of

shares or repurchase of


change of members or shareholders,

inform the foreign investors

Đăng ký

capital contribution or purchase of

shares or repurchase of


change of members or shareholders,

inform the foreign investors

1. With registration of capital contribution or purchase of shares or capital contribution

2. Without registration of capital contribution or purchase of shares or capital contribution

Cases of registering capital contribution, purchasing shares and capital contribution

Reg

istr

atio

n f

or

M&

A

Increases the ownership percentage of foreign investors in a business organization conducting business in the restricted

business lines

Increase ownership percentage by foreign investors >50%

a) ≤50% up to >50%

b) >50%, increase

Has a certificate of rights to use land on an island or in a border or coastal commune; in a coastal commune; in another area that affects national defense and security.

7. Guarantee the execution of the investment projects

Form of guarantee

•Deposit

•Underwrite deposit obligations

Form: guarantee certificate

Content: if the investor fails to extend its validity and investment registration authority’s comments on invalidation of the guarantee are not available, the credit institution must transfer the guarantee amount to the investment registration authority’s account to continue to pay deposits for guaranteeing the project execution

Time

• After approving investment guidelines

• prior to implementing the compensation, assistance and relocation plan (not advance the payment); prior to the time of issuing the decision on land allocation or land lease or land repurposing (had advanced compensation, selected to execute the project through a land use right auction)

Postpone

• If the investor had advanced compensation, assistance or relocation payments

• Pay late deposit

Refund

• No progress required for 50% refund

• If the adjustment of the progress is agreed upon, there will not be charged for the deposit

Adjustment for the Guarantee of the execution of

the investment projects

1. Where the project's investment capital is increased, the investor

shall pay an additional amount of deposit or credit institution’s

deposit payment guarantee

.

2. The investment registration authority and investor shall adjust the project execution guarantee agreement in conformity with the adjustments to the investment project in case a domestic investor that has their investment guidelines approved and is not required to obtain the investment registration certificate, when the project not subject to adjustment of its investment guidelines is adjusted as prescribed in this Decree and the adjustments change any content of the project execution guarantee agreement.

8. Duration of investment projects

Project duration

≤ 70 years

Projects in economic zone

Projects in difficult area

Project with large capital, slow recovery

capital ≤ 50 years

Duration for land projects

According to the objectives, scale, location and operating requirements of the investment project

to decide the duration

Delayed transfer of land(shall not be included in the project duration or

execution schedule)

Applied for every project before 01/07/2015

investment execution schedule adjustment: the project has not expired

Extend for 1 cycle; except:

Obsolete, environment threatening or, resource-intensive

Has content of transferring the investor’s assets without reimbursement

9. Assessment of the value of investment capital, machinery,

technological lines

1. The investor shall determine by itself the value of investment capital for the execution of the project after the project is put into operation.

2. The investor must bear the cost of the assessment in case the assessment result leads to an increase in tax obligations towards the State.

3. Regulation specifying the procedure for the independent assessment (Article 28.1,28.2,28.3 Decree 31/2021/ND-CP)

10. Suspension of the investment project

The total period of suspension of an investment project shall not exceed

12 months.

Suspension procedures:

- Investor: send a notification

- Investment authority: consult opinions, make a record before deciding to

suspend the investment project.

- With the investment projects that are detrimental or potentially detrimental

to the national defense and security: send a notification, seek opinions of

Ministry of National Defense and Ministry of Public Security

11. Termination of the investment project

1. The investor fails to make the deposit or obtain a bank guarantee as provided by law for the project that requires execution guarantee;

2. The investor has conducted the investment activities on the basis of a fraudulent civil transaction according to the civil law

12. Implementation clause: Amendment to 08 related decrees

• Decrees being amended:

1. Decree 46/2014/ND-CP: Supplement special investment incentives (the duration for land rent and

water surface rent exemption is not more than 1.5 times).

2. Decree 52/2020/ND-CP: Procedures for in-principle approval of investment, granting investment

registration certificates, approving investors, adjusting golf projects

3. Decree 25/2020/ND-CP: scope;conditions for determining investment projects using land ; making

a list of investment projects using land for projects with policies and projects not subject to

approval of such policies …

4. Decree 11/2013/NĐ-CP: content regarding gathering opinions on appraisal of urban area projects,

abolishing investment approval procedures.

5. Decree 99/2003/NĐ-CP: processing enterprises, Tasks and powers of high-tech park management

boards

Transition clauses (documents before 1/1/2021)

Document filed in

accordance w. Inv. law

• Expired Investment Law 2014

• Not expired Investment Law 2020

• Exception: project 5000 billion VND

documents filed under the

housing law

• Investor not yet identified Investment Law 2020

• Unidentified Investor, procedures under housing are being performed Continue according to housing law

Document on project transfer

• Projects subjected to investment law investor chooses applicable law

Note

• Documents with opinions continue to use previous appraisal comments if still appropriate.

Transition clauses (Transitioned project adjustments)

- Project under Article 77.2(a) Investment Law (with policies according to 4

laws): carry out the policy adjustment procedure when adjusting the contents in

Clause 3, Article 41 of the investment law.

- Competence: Competent agencies under the Investment Law 2020 will adjust

projects approved under the previous Investment Law, except:

+ Previously not eligible for the Prime Minister's status but subject to approval under

the new law: The Prime Minister approves the adjustment in case of expanding

land use scale or adding more targets specified in Article 31 of the Investment Law.

Other cases are adjusted by the Provincial Committee.

+ The project is 5000 billion, the provincial People's Committee or the policy

approval board: The Prime Minister approves the adjustment in case of

expanding the land use scale or adding the target in Article 31 of the Law on

Investment. Other cases are adjusted by the Provincial Committee.

- Projects Article 77.2(b,c,d) Investment Law: carry out procedures for approval of

investment policies when expanding the scale or changing objectives, leading to the

project under Articles 30, 31, 32 of the Law on Investment

Transition clauses

Process valid dossiers for projects within the scope of investor selection

bidding (Article 115 of the Decree)

- Projects of commercial housing, urban areas, commercial and service works,

multi-purpose complexes with valid documents before April 20, 2020 but as of

January 1, 2021, the investment guideline has not been decided.

- Commercial housing projects, commercial services, multi-purpose works, multi-

purpose complexes with valid documents from April 20, 2020 but as of January 1,

2021, is without the decision for investment.

Processing valid dossiers for housing projects, urban area projects that have

submitted dossiers of application for in-principle approval of investment

according to the Law on Housing (Clause 4, Article 115 of the Decree)

+ Projects with identified investors: continue to carry out procedures for approval

of investment guidelines under the Law on Housing without having to approve

investment policies according to the Law on Investment.

+ Projects that have not yet identified investors: comply with the provisions of

the Law on Investment.

Transition clauses

Cases in which the procedures for in-principle approval of investment are not

required (Clause 2, Article 77 of the Law on Investment)

Adjustment of investment projects made before the effective date of the Law

on Investment (Article 117 of the Decree)

- In case of changing or supplementing the content, objectives; scale expansion;

Proposal of land allocation, land lease…

- Competence and procedures at Clause 3, Article 117 of the Decree

Transition clauses

PANEL DISCUSSION

represents a wide range of multinational and domestic clients, including Fortune Global 500 companies

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M.A TRỊNH THỊ THÚY HẰNG

LEGAL SERVICES

M : 0934.685.006

T : +84 080.44145

MINISTRY OF PLANNING AND INVESTMENT

6B Hoàng Diệu, Ba Đình, Hà Nội

www.mpi.gov.vn

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