Business investment activities play an important role in the overall development of the economy. Viet Nam has certain policies to attract domestic investors as well as foreign investors, including regulations on investment guarantee measures. Let’s find out this issue with Lawyer X through the following scenario: “Dear lawyer! I and my foreign friend intend to invest together in the garment industry in Viet Nam. My friend and I are very concerned about the risks of property ownership that may be confiscated by the state, as well as whether there are any fair dispute resolution measures if the enterprise’s business operation is affected or damaged by the Government’s decision? What is the content of investment guarantees in Vietnam? Looking forward to your advice!”
Legal grounds
Viet Nam Law on Investment 2020
What are investment guarantees?
Business investment means the use of investment capital by investors to carry out business activities. Investor means an organization or individual carrying out business investment activities. Investors include domestic investors, foreign investors and foreign-invested economic organizations.
Investment guarantees are measures prescribed in the provisions of law to ensure the legitimate rights and interests of investors in the process of carrying out investment activities for business purposes. Investment guarantees are the commitments from the host state to the investors about the responsibility of the host state for a number of specific rights and interests of the investor.
The content of investment guarantees in accordance with current legal regulations
Guarantees for asset ownership
– Lawful assets of investors shall not be nationalized or confiscated by administrative measures.
– Where an asset is bought or requisitioned by the State for reasons of national defense and security, national interests, state of emergency or natural disaster management, the investor shall be reimbursed or compensated in accordance with regulations of law on asset requisition and relevant regulations of law.
Guarantees for business investment activities
– Investors are not required by the State to satisfy the following requirements:
+ Give priority to purchase or use of domestic goods/services; or only purchase or use goods/services provided by domestic producers/service providers;
+ Achieve a certain export target; restrict the quantity, value, types of goods/services that are exported or domestically produced/provided;
+ Import a quantity/value of goods that is equivalent to the quantity/value of goods exported; or balance foreign currencies earned from export to meet import demands;
+ Reach a certain rate of import substitution;
+ Reach a certain level/value of domestic research and development;
+ Provide goods/service at a particular location in Vietnam or overseas;
+ Have the headquarter situated at a location requested by a competent authority.
– Depending on the socio-economic conditions and demands for investment attraction in each period, the Prime Minister shall decide to apply forms of guarantee of the State to execute investment projects subject to approval for their investment guidelines by the National Assembly, the Prime Minister, and other important investment projects on infrastructural development.
Guarantees for transfer of foreign investors’ assets overseas
After all financial obligations to Vietnamese government are fulfilled, foreign investors are permitted to transfer the following assets overseas:
– Investment capital and proceeds from liquidation of its investment;
– Their income obtained from business investment activities;
– Money and other assets under the lawful ownership of the investors.
Guarantees for business investment upon changes of laws
– Where a new law provides more favorable investment incentives, investors are entitled to enjoy the new incentives for the remaining period of the incentive enjoyment of the project, except for special investment incentives for the investment projects in the case specified in Point a Clause 5 Article 20 of Law on Investment 2020
– Where a new law that provides less favorable investment incentives than those previously enjoyed by investor is promulgated, investors shall keep enjoying the current incentives for the remaining period of the incentive enjoyment of the project. These regulations do not apply if regulations of a legal document are changed for reasons of national defense and security, social order and security, social ethics, public health, or environmental protection. Where an investor is no longer eligible for investment incentives prescribed in law, one or more of the following solutions shall be adopted:
+ Deduct the damage actually suffered by the investor from the investor’s taxable income;
+ Adjust the objectives of the investment project;
+ Assist the investor in remedying damage.
– With regard to these investment guarantee measures, the investor shall make a written request within 03 years from the effective date of the new legal document.
Settlement of disputes over business investment activities
Disputes over business investment activities in Vietnam shall be settled through negotiation and conciliation. If the negotiation or conciliation fails, the dispute shall be settled by an arbitration body or by a court in accordance with these following regulations:
– Every dispute between a Vietnamese investor and a foreign-invested business entity, or between a domestic investor or a foreign-invested business entity and a regulatory agency over business investment activities within Vietnam’s territory shall be settled by a Vietnam’s arbitration body or Vietnam’s court, except for the cases that disputes between investors in which at least one party is a foreign investor or an economic organization specified at points a, b and c, Clause 1, Article 23 of Law on Investment 2020
– Every dispute between investors, one of which is a foreign investor or a business entity defined in Points a, b and c Clause 1 Article 23 of Law on Investment 2020, shall be settled by one of the following agencies/organizations:
+ Vietnam’s court;
+ Vietnam’s arbitration body;
+ Foreign arbitration body;
+ International arbitration body;
+ An arbitral tribunal established by the parties in dispute.
– Every dispute between a foreign investor and a regulatory agency over business investment activities within Vietnam’s territory shall be settled by Vietnam’s arbitral tribunal or Vietnam’s court, unless otherwise agreed under a contract or prescribed by an international agreement to which the Socialist Republic of Vietnam is a signatory.
Related article:
- Procedures for setting up an insurance business in Vietnam
- Conditions for foreigners to establish a company in Vietnam
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We hope this article is useful for you to answer the question about: “What are rights and obligations of a general partner in Vietnam”. If you need any further information, please contact LSX Law firm: at +84846175333 or Email: [email protected]
Frequently asked questions
Yes! Where an asset is bought or requisitioned by the State for reasons of national defense and security, national interests, state of emergency or natural disaster management, the investor shall be reimbursed or compensated in accordance with regulations of law on asset requisition and relevant regulations of law
Where a new law provides more favorable investment incentives, investors are entitled to enjoy the new incentives for the remaining period of the incentive enjoyment of the project, except for special investment incentives for the investment projects in the case specified in Point a Clause 5 Article 20 of Law on Investment 2020
After all financial obligations to Vietnamese government are fulfilled, foreign investors are permitted to transfer the following assets overseas: Investment capital and proceeds from liquidation of its investment; Their income obtained from business investment activities; Money and other assets under the lawful ownership of the investors.
Conclusion: So the above is General legal regulations on investment guarantees in Viet Nam 2022. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
