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Foreign investment in Vietnam

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Business investment is the investment by an investor to carry out business activities through investment forms prescribed by the investment law in Vietnam. Vietnam is currently becoming a fertile land to attract foreign investors in the fields of transportation, tourism, etc. Therefore, the form of investment is an issue that many foreign investors are interested in. So about the matter “Foreign investment in Vietnam” Let’s find out with LSX in the article below.

Legal grounds

  • Investment Law 2020
  • Decree No. 35/2022/ND-CP

The concept of foreign investment

Foreign investment means that organizations and individuals of one country bring capital in different forms into another country to conduct business activities for profit. Foreign investment is made in the form of direct investment or indirect investment.

Foreign investment activities in Vietnam are regulated from Decree No. 115/CP dated April 18, 1977 promulgating the charter on foreign investment in Vietnam and really developed after the promulgation of the Law on Foreign Investment. in Vietnam on December 29, 1987. According to Vietnamese law, foreign investment has the following signs: 1) The investor is a foreign organization or individual or an overseas Vietnamese; 2) Investment capital: moved from abroad into Vietnam or invested in Vietnam and can be cash, property in kind or property rights; 3) Investment activities are conducted in the territory of Vietnam to earn profits and these profits can be remitted abroad or used for re-investment in Vietnam; 4) Investment activities can be carried out in the form of business cooperation on the basis of a business cooperation contract or the establishment of a foreign-invested enterprise in Vietnam.

Conditions for foreign investors

Foreign investors need to meet the following conditions:

– Foreign investors conducting investment activities in different industries must satisfy all investment conditions for those industries and trades.

– Foreign investors subject to application of international treaties on investment with different provisions on investment conditions may choose to apply investment conditions specified in one of those treaties; in case an international treaty has been selected, foreign investors shall exercise their rights and perform their obligations under the provisions of that international treaty;

– Foreign investors in territories that are not members of the WTO and conduct investment activities in Vietnam are entitled to the same investment conditions as those prescribed for investors in a member country or territory. WTO, unless otherwise provided for by laws and international treaties between Vietnam and that country or territory;

– For service sectors and sub-sectors that have not yet committed or are not specified in Vietnam’s Schedule of Commitments in the WTO and other international treaties on investment in which Vietnam’s law already provides for investment conditions for foreign investors, the provisions of Vietnamese law shall apply;

Foreign investment in Vietnam

Foreign investment has the effect of expanding economic cooperation with foreign countries, taking advantage of capital, modern technology and advanced economic management experience of foreign countries to effectively exploit and use the resources of foreign countries. country.

According to information from the Foreign Investment Department, Ministry of Planning and Investment, as of September 20, 2022, the total newly registered capital, adjusted and contributed capital to buy shares, buy contributed capital of investors foreign countries reached more than 18.7 billion USD; by 84.7% over the same period in 2021 and down 3 percentage points compared to 8 months.

According to the Foreign Investment Agency, although newly registered investment capital decreased, both adjusted investment capital and capital contribution to buy shares continued to increase over the same period.

Specifically, 1,355 new projects were granted investment registration certificates (up 11.8% over the same period); There were 769 times of projects registered to adjust their investment capital (up 13.4% over the same period), the total additional registered capital reached over 8.3 billion USD (up 29.9% over the same period). .

In addition, foreign investors have invested in 18 industries out of a total of 21 national economic sectors. The processing and manufacturing industry continued to lead with a total investment of over 12.1 billion USD, accounting for 64.6% of the total registered investment capital. The real estate business ranked second with a total investment capital of over 3.5 billion USD. Next are the fields of professional science and technology, wholesale and retail.

In terms of the number of new projects, the wholesale and retail sectors, the manufacturing and processing industries and professional science and technology activities attracted the most projects, accounting for 30%, 25.7% and 15 percent, respectively. .9% of total projects.

According to the Foreign Investment Agency, there were 97 countries and territories investing in Vietnam in the first 9 months of 2022. In which, Singapore led with a total investment capital of over 4.75 billion USD, accounting for 25. 3% of total investment capital in Vietnam. Korea ranked second with over 3.8 billion USD. Japan ranked third with a total registered investment capital of over $1.9 billion.

Foreign investors have invested in 53 provinces and cities across the country in the first nine months of 2022. Ho Chi Minh City leads, Binh Duong ranks second, Bac Ninh ranks third.

In terms of the number of new projects, foreign investors still focus on investing in big cities with convenient infrastructure such as Ho Chi Minh City and Hanoi.

Generally, in the first nine months of 2022, the foreign investment sector had a trade surplus of over $29 billion including crude oil and a trade surplus of over $27.3 billion excluding crude oil. Meanwhile, the domestic business sector had a trade deficit of over $23.3 billion.

In particular, in the first nine months of 2022, foreign investment disbursement reached the highest growth rate since the beginning of the year, increasing by 16.2% over the same period in 2021 and increasing by 5.7 percentage points compared to eight months, reaching 15 $ ,4 billion.

“These numbers are quite impressive, affirming foreign investors’ confidence in Vietnam’s economy and investment environment. Therefore, they did not hesitate to make open investment decisions. expanding existing projects in Vietnam,” said a leader of the Foreign Investment Department.

Recently, on June 2, 2022, the Prime Minister signed and promulgated Decision No. 667/QD-TTg approving the foreign investment cooperation strategy for the 2021-2030 period, thereby directing ministries and branches to , localities take the initiative in building a fair, open and transparent business and investment environment; ensure a stable, consistent, synchronous and perfected investment and legal environment.

Along with that, in order to promote investment attraction in industrial parks and economic zones, the Ministry of Planning and Investment advised the Government to issue Decree No. 35/2022/ND-CP dated May 28, 2022 regulations on management of industrial parks and economic zones, in which new types of industrial parks and economic zones have been added; abolishing the procedures for establishing industrial parks to reduce administrative procedures and supplementing and amending a number of regulations to improve the efficiency of land use in the development of industrial parks and economic zones.

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Frequently asked questions

The role and meaning of foreign investment in Vietnam?

With its strengths in resources and young human resources, our country has annually attracted a large amount of foreign investment and is internationally evaluated as one of the most successful countries in attracting FPI in the region and in the world. , is considered as a reliable and effective investment location for many foreign investors.
The attraction of foreign investors has partly contributed to promoting the transformation, promoting economic development, many outstanding growth models, improving the competitiveness of domestic and foreign investors. , thereby promoting economic development. Many products and services are competitively put on the market, promoting institutional reform, economic policies, business investment environment, helping to create many jobs for the young population of our country. Currently, direct employment in the foreign-invested sector has increased from 330,000 people in 1995 to about 3.6 million people in 2017, while creating indirect jobs for about 5-6 million workers.

What are the conditional business investment lines in Vietnam?

Conditional business investment industry means an industry in which the performance of business investment activities in such industry or trade must satisfy necessary conditions for reasons of national defense, security, public order, social safety, social ethics, community health.
• The list of conditional business lines is specified in Appendix IV of the Law on Investment.
• Conditions for business investment in the industries and trades specified in Clause 2 of this Article are prescribed in laws and resolutions of the National Assembly, ordinances and resolutions of the National Assembly Standing Committee, Government decrees and resolutions. international treaties to which the Socialist Republic of Vietnam is a signatory. Ministries, ministerial-level agencies, People’s Councils, People’s Committees at all levels, other agencies, organizations and individuals may not issue regulations on business investment conditions.
• Conditions for business investment must be regulated in accordance with the reasons specified in Clause 1 of this Article and must ensure publicity, transparency and objectivity, saving investors’ time and compliance costs.

Some limitations of foreign investment in Vietnam?

First, the control and management of foreign enterprises by the state is not really effective
In 2016, Formosa was considered a serious pollution case for the water environment. This is a plastic factory under the full name of Formosa Plastic Corporation, owned by a multi-industry Taiwanese corporation. The factory’s failure to treat wastewater and discharge directly into the environment has caused a mass of dead fish, floating all over the central sea area. This is the consequence of the lack of strict control and causes the environmental pollution of our country to become more and more serious, at the same time, it has lost a large amount of marine life resources and severely affected the economy. of people engaged in aquaculture and coastal fishing.
Second, there is no connection and cohesion of foreign investors to the domestic sector. Many products are processed abroad and then transported into our country to perform the final stage or vice versa, thereby not attracting and transferring technology from the foreign investment sector to the investment sector. Domestic investment has not yet achieved as expected, mainly in processing and assembly, the localization rate in some industries is low, the added value per unit of product is not high.

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