Legal hurdles facing foreign invested enterprises that desire to set up new investment projects outside Vietnam have been removed following a new governmental decree issued last week.
Under governmental decree 78/2006/ND-CP (Decree 78), which is a set of revised legal documents providing guidelines for Vietnam’s overseas investments and foreign invested enterprises (FIEs) operating in Vietnam, the companies will no longer fall under the case-by-case consideration by the Prime Minister, except those enterprises looking to enter restricted or prohibited areas, or those having investment capital exceeding VND600 billion ($37.7 million).
Prime ministerial approval is also needed in cases where FIEs’ overseas projects are in the fields of banking, insurance, finance, credit, media, radio, television or telecommunications, and are capitalised at more than VND300bn.
Like all Vietnamese firms, before making their overseas investments workable, FIEs are obliged to apply at the Ministry of Planning and Investment (MPI) and if approved should be awarded an investment certificate within 30 days.
Decree 78 stipulates that only overseas investment projects in the oil and gas sector, and some other industries in particular foreign localities, will need to be governed by another rule adopted by the government.
The new decree has opened a much wider door for FIEs to conduct overseas investments because prior to its release, such projects had to fall under a government’s particular rule that had not been put in place.
Only investment projects established outside the country by Vietnamese enterprises were previously provided with adequate legal grounds, commonly known as Decree 22/CP that did not cover FIEs’ operations.
The Ministry of Planning and Investment (MPI) repeatedly reported that it could not deal with a number of projects submitted by FIEs due to such legal hurdles.
“Some dozens of FIEs had expressed interest in projects but we could not proceed with procedures,”
an MPI official told Vietnam Investment Review.
So far only five FIEs have obtained licences from the prime minister’s case-by-case approval mechanism to implement investment projects outside Vietnam, namely Scavi Vietnam Sarl, Acecook Vietnam, Vedan Vietnam, Luk Vaxi Cement and Foodstuff Processing Ltd.
The latest prime ministerial nod was given only recently to Golden Hope Nha Be - an edible oil venture between local Vocarimex and Malaysia’s Golden Hope Overseas, to implement a $500,000 project in Cambodia. It is also one of the very first investment projects given the green light under the shadow of the newly enacted Investment Law.
“Decree 78 has therefore facilitated investment authorities’ work and paves the way for FIEs’ overseas investment as well,” said the MPI official who wished not to be named.
He also underlined that the new decree has clearly specified the responsibilities of investment authorities in overseeing investment projects set up overseas by both FIEs and local companies, which he viewed as “very important to make such activities more efficient and smooth”.
Latest MPI figures show that Vietnam’s overseas projects numbered 157 with a value of $656.5m at the end of July. Laos, Iraq and Russia are the most popular countries for project mangers to start operations.
No. 774/August 14-20, 2006