Vietnam FDI screening is a critical process for foreign investors looking to enter Vietnam’s dynamic market. Understanding the intricacies of this screening process is essential for ensuring that your investment proposals align with the country’s economic goals and legal requirements. This article aims to demystify the Vietnam FDI screening process, providing valuable insights for potential investors.
1. Understanding Vietnam’s FDI Screening Process
Vietnam FDI screening is a critical process for foreign investors looking to enter Vietnam’s dynamic market. Understanding the intricacies of this screening process is essential for ensuring that your investment proposals align with the country’s economic goals and legal requirements. This article aims to demystify the Vietnam FDI screening process, providing valuable insights for potential investors.
Key authorities involved in the screening process include:
- The Ministry of Planning and Investment (MPI)
- Provincial People’s Committees
- Relevant line ministries (depending on the sector)
The legal framework governing the process is primarily based on the Law on Investment and its implementing decrees, which outline the procedures, criteria, and timelines for FDI approval.
2. Cases Requiring an IRC (Investment Registration Certificate)
As stipulated in Article 37, Law on Investment 2020, The cases that require an IRC include:
- Investment projects by foreign investors (foreign investors are understood as individuals with foreign nationality or organizations established under foreign laws that conduct investment and business activities in Vietnam).
- Investment projects by economic organizations as specified in Clause 1, Article 23 of this Law, whereby economic organizations must apply for an IRC if they fall into one of the following cases:
a) A foreign investor holds more than 50% of the charter capital, or a majority of general partners are foreign individuals in the case of a partnership company.
b) An economic organization specified in point a of this clause holds more than 50% of the charter capital.
c) A foreign investor and an economic organization specified in point a of this clause together hold more than 50% of the charter capital.
2. Steps in the FDI Screening Process
The FDI screening process in Vietnam typically involves the following steps:
a) Pre-application Preparation
Before diving into the application process, it’s essential to lay the groundwork:
- Research Vietnam’s investment climate: Familiarize yourself with the country’s economic trends, growth sectors, and investment policies.
- Understand legal requirements and restrictions: Vietnam has specific regulations governing foreign investment. Some sectors have limitations on foreign ownership, while others may be entirely restricted.
- Choose the right business structure: Options include 100% foreign-owned enterprises, joint ventures, and public-private partnerships. Your choice will depend on your investment sector and goals.
b) Submission of Investment Proposal
Investors must submit a detailed investment proposal to the relevant authority, usually the local Department of Planning and Investment or the management board of industrial zones.
c) Initial Review and Assessment
The receiving authority conducts an initial review to ensure the application is complete and meets basic requirements.
d) In-depth Evaluation
For projects requiring special approval, an in-depth evaluation is conducted, often involving consultations with various government agencies.
e) Decision-making Process
The relevant authority decides whether to approve, request modifications, or reject the investment proposal based on the evaluation results.
3. Contents of the Investment Registration Certificate
As stipulated in Article 40 of the Law on Investment 2020.
The Investment Registration Certificate (IRC) must include the following details:
– Name of the investment project;
– Investor(s);
– Investment project code;
– Location of the investment project and land area to be used;
– Objectives and scale of the investment project;
– Investment capital of the project (including the investor’s contributed capital and mobilized capital);
– Duration of the investment project;
– Project implementation schedule, including:
- Capital contribution and capital mobilization schedule;
- Schedule for achieving the main objectives of the investment project. If the project is divided into phases, the implementation schedule for each phase must be specified.
– Forms of investment incentives, support, and the basis and conditions for application (if any);
– Conditions applicable to the investor for project implementation (if any).
4. Key Factors Considered in the Screening Process
Vietnamese authorities consider several factors when evaluating FDI proposals:
- Economic impact and benefits: The project’s potential contribution to GDP, job creation, and export promotion.
- Technology transfer and innovation: The extent to which the investment brings new technologies or innovative practices to Vietnam.
- Environmental considerations: The project’s environmental impact and sustainability measures.
- National security implications: Ensuring the investment doesn’t threaten national security or sovereignty.
- Compliance with Vietnamese laws and regulations: The project’s adherence to local laws, including labor regulations and tax obligations
5. Conclusion
Navigating Vietnam’s FDI screening process requires patience, preparation, and a thorough understanding of local regulations. While challenges exist, the potential rewards of investing in one of Southeast Asia’s most dynamic economies make it a worthwhile endeavor. By following the guidelines outlined in this article and staying informed about the latest developments, investors can position themselves for success in Vietnam’s thriving business landscape.
Looking for expert guidance on Vietnam’s investment process? HMLF offers professional consulting on Foreign Direct Investment (FDI) screening and assistance with obtaining your Investment Registration Certificate (IRC).
Address: 14th floor, HM Town Building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone: +84 937215585
Website: hmlf.vn
Email: miller@hmlf.vn
