Removing bottlenecks in the Investment Law: A necessary step!

Investment laws in general, and the 2020 Investment Law in particular, have brought about many positive impacts; however, there are still bottlenecks that need to be addressed in the future.

A look back at investment law in Vietnam.

The government has submitted to the 9th session of the 15th National Assembly a law amending several laws in the fields of investment, finance, and budget, including the Investment Law.

Lawyer Nguyen Hong Chung - Vice President and General Secretary of VIPFA. Photo: HC

Speaking to a reporter from the Industry and Trade Newspaper regarding the information that the Government is submitting to the National Assembly a law amending many laws in the fields of investment and finance, including the Investment Law, lawyer Nguyen Hong Chung - General Director of DVL Ventures Ecosystem, Vice President and General Secretary of the Vietnam Industrial Park Finance Association (VIPFA) - said: The history of investment law in Vietnam has gone through many stages of development, reflecting changes in state management thinking and the process of global economic integration.

Specifically, in 2005, along with the Enterprise Law, the 2005 Investment Law was enacted, marking a significant step in Vietnam's process of international economic integration. The 2005 Investment Law established a common investment legal system, applied uniformly to both domestic and foreign investors.

“This unified application has created a more level playing field, enhancing the predictability and attractiveness of the investment environment. The formation of a unified legal framework reflects Vietnam's strategic direction, aiming to harmonize laws and create favorable conditions for all economic sectors,” lawyer Nguyen Hong Chung stated.

The 2014 Investment Law not only inherited and developed from the 2005 Investment Law, but also further refined definitions and procedures, and introduced important concepts such as "Investment Registration Authority" (the authority competent to issue, amend, and revoke Investment Registration Certificates) and "National Investment Information System" (a specialized system for monitoring, evaluating, and analyzing the investment situation nationwide).

These additions demonstrate ongoing efforts to institutionalize and standardize investment management processes, aiming to improve administrative efficiency and information transparency.

The 2020 Investment Law is the latest version, effective from January 1, 2021, completely replacing the 2014 Investment Law. This law clearly regulates investment and business activities in Vietnam and investment and business activities from Vietnam to abroad.

“The clear expansion of the scope of regulation of investment and business activities from Vietnam to overseas demonstrates the maturity of the Vietnamese economy and the increasing role of Vietnamese businesses in the international arena. This reflects a proactive policy adjustment aimed at facilitating Vietnamese businesses to expand globally and managing outbound investment flows, not just focusing on attracting FDI as before,” – the VIPFA Secretary General stated.

The 2020 Investment Law has brought about many positive impacts, contributing to improving the business environment and attracting investment in Vietnam. (Illustrative image)

Contributing to the business environment in Vietnam.

According to economic experts, investment laws in general and the 2020 Investment Law in particular have had many positive impacts, contributing to improving the business environment and attracting investment in Vietnam. Accordingly, one of the highlights of the 2020 Investment Law is the effort to reform administrative procedures and reduce the legal burden on businesses.

Analyzing this issue in more detail, Mr. Nguyen Hong Chung stated that, compared to the 2014 Investment Law, the 2020 Investment Law has abolished 24 business sectors, added 8 new sectors, and amended 14 sectors, reducing the total number of conditional business sectors from 243 to 227.

This change reflects the government 's commitment to creating a more favorable environment for businesses to enter the market. The law also clearly defines the principles and conditions for investment and business, overcoming the previous situation of scattered regulations in many different documents, which caused inconsistencies and difficulties for investors.

The 2020 Investment Law also introduced, for the first time, a definition of "Innovative Startup Investment Project." This laid the groundwork for more open regulations, whereby foreign investment projects related to innovative startups and innovative startup investment funds are exempt from investment registration procedures, requiring only business registration. This is of significant importance in creating a dynamic startup investment environment.

The investment legal system, particularly the 2020 Investment Law, has impacted the attraction of foreign direct investment (FDI) and domestic private investment, creating opportunities for economic growth in Vietnam.

However, despite significant improvements in the legal text, experts and businesses still believe that the 2020 Investment Law "has not created a breakthrough in procedures" in practice. This is because overlaps in regulations between the Investment Law and related laws lead to obstacles in policy implementation.

Specifically, the current investment sector is governed by a complex network of legal documents such as the Investment Law, the Public Investment Law, the Land Law, the Enterprise Law, the Construction Law, the Environmental Protection Law, and the Housing Law. Within these laws, many regulations contradict each other, creating difficulties for businesses and investors.

This situation leaves businesses, investors, and government agencies confused about which laws to follow, leading to increased costs in terms of time and money, and preventing many projects from being implemented.

The Investment Law has made strides in reforming administrative procedures. Photo: Thu Hang

Continue to improve investment legislation.

Experts believe that Vietnam's Investment Law is an indispensable component of the economic legal system, playing a crucial role in guiding and managing investment flows. Although the 2020 Investment Law has achieved many successes in improving the business environment and attracting investment, inadequacies such as overlapping laws and administrative barriers remain significant challenges.

Therefore, to effectively attract investment, the most effective path is to continue improving the Investment Law through a comprehensive approach, focusing on legal harmonization, substantive administrative reform, and addressing non-legal barriers.

"In this way, Vietnam can build a truly open, transparent, and competitive investment environment, realizing its goal of becoming an attractive destination for domestic and international investors," lawyer Nguyen Hong Chung stated.

Previously, in response to a letter from the Ministry of Finance regarding the assessment of the implementation and proposed amendments and additions to the Investment Law and Decree No. 31/2021/ND-CP, a representative of the Vietnam Chamber of Commerce and Industry (VCCI) stated that the Investment Law is an important document that has a significant impact on Vietnam's investment and business environment and receives considerable attention from the business community.

According to VCCI, the 2020 Investment Law and its subsequent amendments have essentially addressed the obstacles, inadequacies, and overlapping conflicts between legal systems concerning land, construction, bidding, housing, real estate business, and environmental resources.

Through its revisions, the Investment Law has also made progress in reforming administrative procedures, facilitating the investment process. This includes strongly decentralizing the authority to approve investments from the Prime Minister down to the Chairpersons of provincial People's Committees, and establishing a special investment process with an open approach, where most procedures in the investment process will be managed through a post-audit mechanism…

However, through the implementation process and with the requirements of administrative reform, removing bottlenecks, and promoting the investment and business environment, the Investment Law has gradually revealed its limitations, from its underlying principles to its management mechanisms.

To address these issues, VCCI proposes considering several matters related to: the management mechanism for foreign investors conducting investment and business activities in Vietnam; approval of investment policies; transfer of investment projects; conditional business sectors; and the management mechanism for overseas investment activities.

The 2020 Investment Law has been and continues to be an important tool in managing and guiding investment, especially in the context of Vietnam's efforts to attract high-quality FDI and participate extensively in new-generation trade agreements. Although the 2020 Investment Law has achieved many successes in improving the business environment and attracting investment, inadequacies regarding overlapping laws and administrative barriers remain significant challenges.

Nguyen Hoa

Source: https://congthuong.vn/go-diem-nghen-trong-luat-dau-tu-buoc-di-can-thiet-390623.html