A new regulation on revoking investment certificates of foreign invested projects in Vietnam is expected to make it easier to cancel poorly performing ones, the Vietnam Investment Review (VIR) reported.
Under Article 57 of the draft amendment to the existing Investment Law, an investor could have his investment certificates revoked if he has failed to begin implementation or proved incapable of implementing the project after 12 months, or if the project has ceased operations and local authorities cannot contact either the investor or his authorised representatives within a year.
The revocation of the newly defined investment registration certificate shall also be made by a tribunal or arbitrators.
“The new regulation will provide local authorities with stronger legal foundations to rescind investment certificates. The current regulations are too vague, making it currently very difficult for foreign invested projects to be cancelled,” attorney-at-law Tran Trong Binh from Hanoi-based Audier and Partners told VIR.
The current Investment Law, issued in 2005, simply states in Article 64 on the revocation of investment certificates that “if after 12 months, the investor has failed to proceed with implementation of the project in accordance with the schedule undertaken without a legitimate reason, the issued investment certificate shall be revoked.”
“But to what extent can a project be considered to have been carried out? What conditions should the investor have to meet to prove themselves capable of deploying the project according to their schedule? And what is a ‘legitimate’ reason?” Binh said.
However, he added that the draft regulations were still vague as the only applied to production-oriented projects.
“Meanwhile, many investors operating in investment consultancy, distribution and intermediary sectors are coming to Vietnam. I think these types of projects should be covered in the revised law,” he said.
Echoing this view, a representative from the Quang Ninh provincial Investment Promotion Agency’s Investment Promotion Division said the new regulations were still not clear enough. “What does ‘failure to be implemented after 12 months’ mean? What if after a year the investor has only constructed fences and employed some workers on a project with a 50-year life-span, does that mean the project hasn’t been implemented? This regulation needs to be clarified.”
According to the Ministry of Planning and Investment (MPI), the author of the draft amendment, although it is currently easy to grant an investment certificate for an investment project, it is next to impossible to withdraw its certificate due to the currently unclear regulations.
“Despite having the certificate, many investors don’t implement their projects, but instead hold onto the land and exploit their plot to do other things not related to their projects. Therefore specific regulations are needed to terminate these types of projects,” said Minister Bui Quang Vinh.
Last year saw representative offices of German-backed Metro Vietnam and US-backed Avon Vietnam forced to stop operations in the northern province of Quang Ninh.
The Bac Ninh provincial Department of Planning and Investment reported that the province revoked the investment certificates of nine foreign invested projects worth 71.8 million USD in 2013. The province so far has revoked 74 foreign invested projects with the total registered investment capital of 298.3 million USD.
The Dong Nai provincial Department of Planning and Investment also reported that the province had withdrawn investment certificates for 22 foreign invested projects registered at 87.3 million USD last year. The province has cancelled 314 foreign invested projects worth nearly 4.35 billion USD in total.-VNA
Under Article 57 of the draft amendment to the existing Investment Law, an investor could have his investment certificates revoked if he has failed to begin implementation or proved incapable of implementing the project after 12 months, or if the project has ceased operations and local authorities cannot contact either the investor or his authorised representatives within a year.
The revocation of the newly defined investment registration certificate shall also be made by a tribunal or arbitrators.
“The new regulation will provide local authorities with stronger legal foundations to rescind investment certificates. The current regulations are too vague, making it currently very difficult for foreign invested projects to be cancelled,” attorney-at-law Tran Trong Binh from Hanoi-based Audier and Partners told VIR.
The current Investment Law, issued in 2005, simply states in Article 64 on the revocation of investment certificates that “if after 12 months, the investor has failed to proceed with implementation of the project in accordance with the schedule undertaken without a legitimate reason, the issued investment certificate shall be revoked.”
“But to what extent can a project be considered to have been carried out? What conditions should the investor have to meet to prove themselves capable of deploying the project according to their schedule? And what is a ‘legitimate’ reason?” Binh said.
However, he added that the draft regulations were still vague as the only applied to production-oriented projects.
“Meanwhile, many investors operating in investment consultancy, distribution and intermediary sectors are coming to Vietnam. I think these types of projects should be covered in the revised law,” he said.
Echoing this view, a representative from the Quang Ninh provincial Investment Promotion Agency’s Investment Promotion Division said the new regulations were still not clear enough. “What does ‘failure to be implemented after 12 months’ mean? What if after a year the investor has only constructed fences and employed some workers on a project with a 50-year life-span, does that mean the project hasn’t been implemented? This regulation needs to be clarified.”
According to the Ministry of Planning and Investment (MPI), the author of the draft amendment, although it is currently easy to grant an investment certificate for an investment project, it is next to impossible to withdraw its certificate due to the currently unclear regulations.
“Despite having the certificate, many investors don’t implement their projects, but instead hold onto the land and exploit their plot to do other things not related to their projects. Therefore specific regulations are needed to terminate these types of projects,” said Minister Bui Quang Vinh.
Last year saw representative offices of German-backed Metro Vietnam and US-backed Avon Vietnam forced to stop operations in the northern province of Quang Ninh.
The Bac Ninh provincial Department of Planning and Investment reported that the province revoked the investment certificates of nine foreign invested projects worth 71.8 million USD in 2013. The province so far has revoked 74 foreign invested projects with the total registered investment capital of 298.3 million USD.
The Dong Nai provincial Department of Planning and Investment also reported that the province had withdrawn investment certificates for 22 foreign invested projects registered at 87.3 million USD last year. The province has cancelled 314 foreign invested projects worth nearly 4.35 billion USD in total.-VNA
