NEW POINTS IN FORMS OF INVESTMENT IN VIETNAM FOR FOREIGN INVESTORS ACCORDING TO LAW ON INVESTMENT 2020
NEW POINTS IN FORMS OF INVESTMENT IN VIETNAM FOR FOREIGN INVESTORS ACCORDING TO LAW ON INVESTMENT 2020
In the context that the Covid-19 pandemic is still having significant effects on the economy around the world, Vietnam is, nevertheless, a country with a remarkable growth rate, attracting FDI and is highly appreciated by investors. Recently, the Law on Investment in Vietnam has been adjusted, so investors, especially foreign investors, are interested first.
Law on Investment No. 61/2020/QH14 promulgated on June 17, 2020 and effective from January 1, 2020, has been adjusted compared to Law on Investment No. 67/2014/QH13, including regulations investment form, specifically as follows
- List of investment forms and PPP contracts
Unlike the Law on Investment 2014, the Law on Investment 2020 devoted entirely to Article 21 listing investment forms, including:
1. Invest in the establishment of business organizations.
2. Investment in the form of capital contribution or purchase of shares or stakes.
3. Execution of an investment project.
4. Investment in the form of a business cooperation contract.
5. New forms of investment and types of business organization prescribed by the Government's regulations.
According to the investment forms listed above, the Law on Investment2020 does not list and regulate investment under PPP contract (investment in the form of public-private partnership). Instead, PPP contracts will be governed by the Law on Investment in the form of public-private partnership, which takes effect on January 1, 2021. Thus, instead of stopping at the decree as before, the National Assembly decided to issue a separate law, build a more effective, more stable legal framework and ensure the specificity of PPP investment. Thereby creating a stable legal environment for foreign as well as domestic enterprises.
Regarding 05 forms of investment under the Law on Investment 2020, DHT would like to send to investors the following general assessment
- Invest in the establishment of business organizations
The first new point to be mentioned in the Law on Investment 2020 is that foreign investors establishing economic organizations must satisfy market access conditions.
In addition, the new law also adds 02 exceptions that do not require an investment project and an investment registration certificate before the establishment of an economic organization for foreign investors in accordance with the law on financial assistance. support small and medium enterprises. Specifically:
Case 1: Establishing a small and medium-sized enterprise with a creative start-up.
Case 2: Innovative startup investment fund.
This shows that the Government of Vietnam is increasingly interested in innovative small and medium-sized enterprises when the investment law has become more specific and measures to support innovative start-up businesses gradually diversify both on the goals, methods of implementation and the scale of support.
- Investment in the form of capital contribution or purchase of shares or stakes
Compared with the old law, the Law on Investment 2020 slightly adjusts the percentage of charter capital of foreign investors. Specifically, the new law has adjusted the criteria for determining foreign-invested economic organizations based on holding 51% or more of charter capital to holding 50% or more of charter capital in order to be consistent with the level of controlling shares/stakes in accordance with the provisions of Law on Enterprise 2020.
In addition, in order to supplement necessary protection measures to improve the efficiency of state management of investment in ensuring national security, the new investment law has been completed and supplemented with regulations in which Foreign investors invest in the form of enterprise establishment, capital contribution, share purchase, purchase of contributed capital in enterprises located on islands, communes, wards, border towns, coastal areas or areas sensitive to security. national security.
- Execution of an investment project
The Law on Investment 2020 generally inherits and retains the provisions of the old law, with only other changes in the charter capital holding ratio of foreign investors as analyzed above, which is 50%.
- Investment in the form of a business cooperation contract
Regulations on investment in the form of BCC compared between current investment law and previous investment law are similar. Specifically, BCC signed between domestic investors comply with the provisions of civil law; For the case of domestic investors with foreign investors or foreign investors together in Vietnam, comply with the provisions of the Law on Investment.
- New forms of investment and types of business organization prescribed by the Government's regulations
A big step forward for the Law on Investment 2020 is to foresee more forms of investment instead of as previously specifying only 5 forms of investment. Legal regulations are increasingly developing according to the constant flow of the economy, no longer stereotypical, rigid but open regulations. As a result, Vietnam is ready to open a larger door for investors with new forms of investment and economic growth in the future.
In conclusion, the forms of investment in particular and the Law on Investment 2020 in general are open wider with many incentives, and are increasingly improved and perfected. That creates comprehensive conditions and good opportunities for foreign investors who want to invest and do business in Vietnam.
Above is the general advice of Dai Ha Thanh Law Firm on new points in the form of investment in Vietnam for foreign investors under the Law on Investment 2020. If you have any questions or concerns, please contact us for professional legal advice services.
