Review procedurei Threshold for review
Investment registration procedures for issuance of an investment registration certificate (IRC) apply to all investment projects of FIs or semi-FIs (see Section VII) either made through establishing new enterprises or entering into contracts such as BCCs. Investment registration procedures also apply to semi-FIs who have new investment projects. FIs and semi-FIs who wish to establish a new company for a new investment project will apply for an enterprise registration certificate (ERC) after obtaining an IRC. Certain projects require formal review for issuance of in-principle approval by the National Assembly, the Prime Minister or provincial-level government, depending on the size and the sector of the investment projects.ii Review time frame
The time frame for investment registration procedures is 15 working days from submission of the completed application or, if a formal review is required, then five working days from the date of the in-principle approval of the relevant authority. A time frame of 35 working days is provided for formal review by provincial-level government while no specific time frame is provided for formal review when in-principle approval is required from the National Assembly or the Prime Minister.
In practice, it normally takes much longer. The review process can encounter delays for several reasons, including the inability of the licensing authorities to review the large volume of applications, the complexity of the projects and a lack of guidelines on certain businesses or transactional structures. The average practical time is two to three months, but may be up to six to nine months or longer for complex projects.iii Test for clearance
The fundamental test used during the review process is verifying the following:
- satisfaction of investment conditions for the FI (if any);
- conformity of the investment projects with the master plan for socio-economic development and development planning for the relevant business sectors, land-use zoning, socio-economic impacts and efficiency of the project;
- satisfaction of conditions for entitlement to investment incentives (if any);
- land-use demand for the project, conditions for land grant or lease and the need for conversion of the land-use purpose; and
- technological solutions (if applicable).
Besides the above tests, during the investment registration or project review, the licensing authorities also verify the satisfaction of conditions stipulated by the relevant laws for projects in conditional sectors.
Conditions vary from sector to sector, subject to the laws and regulations governing the relevant sectors. Generally, conditions shall be expressed in the following forms.Operation licence
An operation licence is required after the ERC is issued and before commencement of relevant business in Vietnam. A licence will be required by a business having a significant impact on social or national economic interests, such as education, banking, insurance, securities, hospital and clinics, newspapers and television.Certificate of satisfaction of business conditions
This certificate is for the purpose of ensuring that an enterprise already satisfies the compulsory requirement for its products or services for the interests of customers. For example, a food manufacturer or trader may be required to have a certificate of satisfaction of conditions for food safety.Practising certificate
Practising certificates are required in the professional business sectors, such as the legal profession, aviation, education, construction (architecture and engineering), hospitals and clinics, accounting and auditing. The head of a company or key staff, as the case may be, of a company doing business in an area that requires a practising certificate would need to hold the required practising certificate. The certificate must be issued by the relevant Vietnamese authority. Practising certificates issued overseas may not be accepted in Vietnam, unless otherwise provided in Vietnamese laws or in an international treaty to which Vietnam is a signatory.Certificate of professional liability insurance
To protect customers' interests, certain types of insurance are compulsory for certain business sectors, such as professional indemnity insurance for legal consultancy activities.Legal capital
Legal capital means the minimum amount of capital required by law for the establishment of an enterprise. Legal capital is required in the banking and financial, real estate business, transportation and telecommunications sectors, among others. Charter capital (i.e., registered or authorised capital) of the enterprises subject to legal capital must be equal to or higher than legal capital.Other required approvals of competent authorities
In some business sectors, further approvals may be required, such as approval for an environmental impact assessment report for a project in which there is a potential risk of causing adverse effects on the environment, or a construction permit for a project involving construction, approval for a plan relating to chemical-related incident prevention and responsive measures for a project relating to production and trading of certain chemicals.Other requirements
In certain circumstances, an enterprise need not obtain any approval from the relevant authority but must satisfy conditions before conducting the relevant business, such as the requirements relating to infrastructure and technical facilities, personnel capability, etc.
Vietnam does not have an explicit test or official definition of 'national interest' or 'public interest' in the review process. However, the LOI sets forth provisions for the prohibition of certain types of projects, which could be considered a test for national or public interest.
Vietnam does not have an explicit 'net benefits' test either. However, during the review process, investors are required to provide technical and economic statements, which include projections regarding the number of jobs created and the estimated amount of tax. Weak projections may be questioned. The licensing authorities are reluctant to grant extensions for expiring projects that are not profitable unless the investors can satisfactorily explain the reasons and have a plan to become profitable.iv Availability of appeal or other remedies
FIs who do not agree with the decision rejecting their IRC application may file complaints according to the procedures for making a complaint against an 'administrative decision' in the Law on Complaints.
A complainant has the option to file the complaint directly to the person issuing the administrative decision or to the government office of that person, or to file a petition at the Administrative Court.
If the first option is selected and the complainant is not satisfied with the settlement of the first complaint, or does not receive the settlement decision within the stipulated time, the complainant may file a second complaint to the head of the supervising office (one level higher) or file a petition at the Administrative Court. If settlement of the second complaint is not satisfactory, the complainant may file a petition at the Administrative Court.
The second complaint is not applicable if the person issuing the administrative decision at issue is a minister or the head of a ministry-ranking office. The complainant may file a petition at the Administrative Court.
If the administrative decision is issued by the chairman of a provincial People's Committee (i.e., provincial-level government), the minister concerned will be the one who receives the second complaint if the complainant elects to file a second complaint. For investment activities, the Minister of Planning and Investment will receive the second complaint.
Alternatively, FIs may opt to rely on the right provided under Article 14.2 of the LOI, which allows investors in dispute with Vietnamese state authorities regarding investment activities in Vietnam to refer the dispute to the Vietnamese courts or to arbitration.
The laws, however, do not have further guidelines on settlement of a dispute between FIs and state authorities by arbitration. Therefore, without agreement on arbitration in the specific agreements between the FIs and the state authority, or in international treaties to which Vietnam is a party, FIs will not be able to refer the dispute to arbitration for settlement.v Practice of authorities engaging in dialogue and cooperation with other jurisdictions
It is not common practice in Vietnam for the authorities to engage in dialogue and cooperation with other jurisdictions regarding their investment application review procedures.
However, FIs may invoke the assistance of their consulate in Vietnam to speak to the Vietnam licensing authority to facilitate investment activities based on investors' rights provided for in relevant trade agreements or investment agreements.vi The rights and standing of third parties in the review process
During the review process, the licensing authority may be required to consult different government agencies (at the provincial level or ministry level) for opinions on the conformity of an investment project with different laws of Vietnam. However, involving the public in the review process for investment project registration is not specifically provided for in the legislation (i.e., the licensing authorities are not required to seek opinion from the public during project registration or review). Nevertheless, if investment projects involve the use of land currently being used by other users or occupants, arrangements must be made with the users or occupants to provide compensation to them for having to surrender the land back to the government for leasing to the FIs. These arrangements should be completed before project registration or review, otherwise failure to complete the land acquisition procedures may result in huge delays or even failure of the investment project.