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Guides on foreign investment projects in VN

VGP – The Government on November 15, 2015 released Decree 118/2015/ND-CP, detailing and guiding the implementation of some articles of the 2014 Investment Law (Decree 118).

Question: What are the new regulations on the implementation of investment activities, termination of investment projects, report on investment projects, and investment incentives and support as stipulated on Decree 118/2015/ND-CP?

Answer:

Implementing investment activities

Scope and conditions of each project, investment projects shall comply with one or more of the following procedures: (i) the decision on investment policy and issuance of an investment registration certificate in accordance with Investment Law and this Decree; (ii) establishment of economic organizations for foreign investors to invest in the form of economic organization establishment; (iii) implementing procedures for allocation and re-allocation or lease, sub-lease, or permit the change of purpose of land use in accordance with the law on land (if any); (iv) implementing construction procedures in accordance with the law on construction. In case investors award the auction for the land use right or the bidding for investment projects involving land use, the investment will be implemented under the relevant provisions with written approval of the auction result or result of investor selection in consistency with the law and have not to perform the procedures of investment policy decision with the People’s Committee at provincial level.

Foreign investors investing in the form of capital contribution and share purchase, the capital share in the economic organization is not required to perform the procedures issuance of an investment registration certificate, unless foreign investors contribute capital and purchase shares or equity: (i) in economic organizations performing in conditional investment business lines applicable to foreign investor; (ii) the capital contribution, purchase of shares or equity lead to an increase in charter capital owned by foreign investors under 51% to over 51%, and increasing its percentage of owned charter capital for investors that already own more than 51% of charter capital in economic organizations.

Termination of investment projects

Decree 118 also instructs in detail the order and procedures for termination of the project in the cases mentioned in Article 48 of the Law on Investment. Termination of the project due to unable to contract with the investor, Decree 118 stipulates that when the project stops due to an investor such as sending a letter requesting the investor to make contact at the address registered with IRA or send a letter requesting communication support from the People’s Committee of the commune where the investor resides. After implementing contact measures and after the expiry of 12 months from the date the investment project stopped operating, and the investor or his legal representative still can not be contacted, the IRA will end the project. Assets of the investment project will be resolved in accordance to the provisions of the civil law on property management of absentee people.

Report on investment report
Economic organizations implementing investment projects must report to the IRA and State management agencies with respect to local statistics indicators, including (i) monthly report on the implementation of capital; quarterly reports made before the 12th of the first month of the quarter following the quarter being reported; and (ii) annual reports to be made before March 31 of the following year reported.

Reports will be sent online on the National Information System for investment and which does not need to be submitted in writing.

Investment incentives and support

According to Annexure I on list of incentives lines of investment and Annex II on list of areas of investment incentives which details the provinces and cities facing difficult or extremely difficult economic-social conditions, investment projects may apply for investment incentives. Accordingly, beneficiaries include investment projects in regions with difficult economic-social conditions; projects implemented in industrial parks, export processing zones and projects to which the special investment incentives apply in areas with special difficulties; and investment projects implemented in high-tech zones and economic zones, and will have its deposits reduced by 25% and 50% in accordance with the law.

Decree 118 replaces Decree 108/2006/DN-CP and shall take effect on December 27, 2015./. 

Take action to restructure the economy and transform the growth model in accordance with the roadmap and proper steps to establish, by 2020, a more in-depth model of economic growth that ensures the quality of growth and a more efficient and competitive economy.

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