Amended Investment Law: Paving the way for a new growth cycle

(Chinhphu.vn) - The world economy is undergoing profound changes: supply chains are shifting, FDI capital is reallocating, and a new wave of technology is reshaping the competitiveness of countries. For Vietnam, this is both a challenge and a rare opportunity for breakthroughs.

Many localities are looking for new momentum, businesses expect a more favorable investment environment.

Many localities are looking for new momentum, businesses expect a more favorable investment environment, and international investors are closely monitoring Vietnam's institutional reforms to make decisions.

In that context, the draft amended Investment Law (recently submitted by the Government to the National Assembly at the ongoing 10th Session) is considered a strategic step to create a transparent, open investment-business environment in line with modern management standards. This is not only an investment law, but also an important foundation for how the economy operates in the coming years.

Practical bottlenecks are demanding change.

Looking back at the past period, it can be seen that the difficulties in investment procedures and the lack of synchronization of the relevant legal system have created significant obstacles to the development process. This is not a subjective feeling, but a reality that has been consistently reflected by many localities, businesses and research institutions.

Firstly, the procedural delays are still too great. According to many localities, some projects take from 12 to 24 months to complete the investment approval process, even though the documents do not have major legal problems. A provincial leader shared: "We do not lack capacity, but the procedures cause the progress to be delayed beyond expectations. Many investors come back to ask why it takes so long for a pre-inspection procedure." The Provincial Competitiveness Index (PCI) report in recent years also shows that "administrative procedures and legal overlap" are always among the three biggest barriers to the business environment.

Second, business conditions are still complicated and lacking updates. Despite many efforts to reduce them, some industries that no longer need strict management are still in the list of conditional businesses. This unintentionally maintains the request-grant mechanism, increases unofficial costs and hinders the emergence of new business models. VCCI and experts have repeatedly recommended significantly reducing business conditions in many industries and occupations in the current list, which are considered no longer suitable for reality.

Third, the current policy framework is not attractive enough to attract high-tech industries. In the global race for semiconductors, AI, green technology or low-carbon manufacturing, countries have designed very flexible incentive mechanisms and legal corridors. Meanwhile, many large investors said they "appreciate Vietnam's potential, but want an incentive framework and procedures compatible with the speed of the technology industry". Without timely reforms, Vietnam risks missing out on high value-added capital flows - a key factor for growth in the coming period.

Fourth, the overlap between laws is creating a vicious cycle of procedures. An investment project must simultaneously comply with the Investment Law, Land Law, Planning Law, Environmental Protection Law, Fire Prevention and Fighting Law, Bidding Law, etc. Just one point of inconsistency between these laws - such as slow planning issuance, slow land price determination, or lack of agreement on environmental criteria - is enough to cause the entire project to stagnate. Some localities frankly commented: "It's not that we don't want to do it quickly, but we have to wait for the related procedures of many different laws."

The above realities are not only problems of enterprises or localities, but also problems of national competitiveness. If not resolved promptly, the opportunity cost for the economy will be huge. Therefore, this amendment to the Investment Law is of urgent significance: not only to deal with individual problems, but also to re-establish the way the entire investment process operates, creating a smooth legal foundation for the new development stage of the country.

For the first time, high-tech, digital economy and green economy sectors have been identified as the center of the investment incentive mechanism.

Important innovations in the revised Investment Law

The bottlenecks that have persisted for many years show the urgent need to restructure the investment process, shifting the focus from "input control" to "risk management and efficiency promotion". This revised draft Investment Law carries that spirit, with five key reform groups creating a fundamental shift in the way the economy operates.

1. Drastically reduce pre-inspection procedures and accelerate project implementation. One of the most important innovations of the draft law is to drastically narrow down the group of projects that must obtain investment policy approval, retaining only projects that have a major impact on land, environment, national defense and security, or are related to strategic resources. Regular projects, especially in the fields of production, trade, and services, are transferred to the registration and post-inspection mechanism.

This is a fundamental change because: (a) Project preparation time is significantly shortened, helping businesses seize opportunities at the right time. Every month that procedures are shortened, thousands of billions of VND of resources are released into production and business; (b) Avoiding "lost opportunity delay", which is the biggest risk in the context of competition to attract FDI and the rapid shift in supply chains; (c) Reducing room for asking and giving and limiting harassment, thanks to narrowing unnecessary administrative contact points; (d) Creating a stable and transparent signal for domestic and foreign investors - the factor they often put first when choosing a destination.

This reform not only helps projects "get on track" faster, but also shows an important shift in thinking: the State is not at the control gate, but stands in the position of creation and transparent supervision.

2. Narrowing down dozens of conditional business sectors - expanding the space for free business. A mature economy must gradually reduce its dependence on business conditions and increase the role of transparency, competition and post-audit. The amended law is on the right track when it: abolishes about 25 sectors and occupations that no longer need to be regulated (and the Government is reviewing further to be able to abolish more, at least 50 sectors and occupations); narrows the scope of 20 other sectors and occupations to eliminate outdated, ambiguous or no longer relevant criteria.

The significance of this change is enormous. It is to respect the right to freedom of business - a constitutional right, and the foundation of a market economy; to increase the space for innovation and competition for businesses, especially small and medium-sized enterprises, which are heavily affected by complex business conditions; to reduce "soft barriers" - where informal costs easily arise and reduce market confidence.

This move is in line with the international trend of managing less but more effectively and efficiently.

3. Strongly prioritizing high technology, innovation, and green economy. For the first time, high technology, digital economy, and green economy sectors are identified as the center of the investment incentive mechanism. This reflects a long-term vision: If Vietnam wants to make a breakthrough in the coming period, it must rely on knowledge, technology, and innovation capacity.

These priorities help us increase our attractiveness to leading corporations in the fields of semiconductors, AI, biotechnology, and low-carbon technology; open up opportunities for Vietnamese enterprises to participate more deeply in the shifting global value chain; and embrace the green development trend - an increasingly important criterion in international trade, attracting investment and accessing markets.

This is a shift from attracting capital in breadth to attracting resources with high added value, in line with the country's long-term development goals.

4. Make it easier for foreign investors - improve Vietnam's competitiveness. Allowing foreign investors to establish a business first, and then complete the procedures for applying for an investment registration certificate, is a reform in line with OECD and international practices.

This helps reduce the cost of market entry, especially in the fields of technology, digital services, and e-commerce; increases the predictability of administrative processes, helping investors plan more effectively; and enhances Vietnam's image as an open and innovation-friendly economy.

In a context of fierce regional competition, speed and clarity of procedures are strategic advantages.

5. Enhance enforcement discipline - protect public resources and market order. Along with "opening the way", the law also "tightens" the necessary steps to ensure effective use of resources. New regulations on project progress, extension and transfer help screen out incompetent investors, avoid the situation of registering many but doing little; prevent project speculation or "holding land" for a long time, causing waste of resources and loss of development opportunities for localities; increase the efficiency of land use and public resources, and protect genuine investors.

The harmonious combination of "loosening input" and "tightening enforcement" creates a healthy, stable and sustainable investment environment.

When adopted early: benefits ripple for a decade to come

The early completion and promulgation of the amended Investment Law will not only remove immediate obstacles, but also create strategic spillover effects for the entire development period of 2025-2035. This is the time when the speed of reform can determine the country's ability to seize opportunities.

1. Promote economic recovery and acceleration in the short term. When procedures are streamlined and processes are clarified, a series of projects in industry, urban areas, infrastructure, services, etc. can be "activated" immediately. Many localities forecast that just cutting down on investment policy procedures can shorten the project preparation process by months, thereby creating more jobs, increasing output and strongly contributing to economic growth.

2. Simultaneously liberate two resources: private investment and FDI. A stable and transparent legal framework helps localities be more proactive in approving projects. For private enterprises, the clarity of the law is a factor that strengthens their confidence to expand production and launch new projects. For FDI, the improvement of the investment environment is a "green signal" showing that Vietnam is ready to welcome large-scale and high-tech projects.

3. Strengthening market confidence - a prerequisite for sustainable recovery. In the context of a volatile global economy, businesses especially value the stability and predictability of policies. The National Assembly's early approval of the amended Investment Law will create an important "psychological support", affirming the State's determination to reform and strengthening the business community's confidence in the recovery prospects.

4. Increasing competitiveness in the race to attract future technology industries. The wave of investment shifts is strongly directed towards markets that can provide fast procedures, transparent institutions and clear priorities for high technology. If reforms are made in time, Vietnam has the opportunity to emerge as a leading destination for semiconductor, AI, green technology corporations, etc. On the contrary, delays can cause opportunities to fall into the hands of countries in the region.

A law to pave the way for the future

The amended Investment Law is not only aimed at improving the procedural apparatus or removing immediate difficulties. More importantly, this is the law that lays the foundation for a new development model of Vietnam - where speed, transparency and creativity of enterprises become the main growth drivers.

The early passage of this law is a step that demonstrates the State’s determination to reform, its spirit of accompanying businesses, and its long-term vision for the country’s future. When institutions are open, capital will naturally flow in; when confidence is strengthened, the strength of the economy will rebound strongly.

Dr. Nguyen Si Dung

Source: https://baochinhphu.vn/luat-dau-tu-sua-doi-mo-duong-cho-mot-chu-ky-tang-truong-moi-10225120707005322.htm