With the increasing development needs of the market economy, many projects and works are built with support from foreign investors. Therefore, our Party and State have long issued many policies to support and create conditions to attract large foreign investors to Vietnam. So about the matter “What is foreign investment in Vietnam?” Let’s find out with LSX in the article below.
Legal grounds:
- Investment Law 2020
What is foreign investment in Vietnam?
Foreign investment is understood as the investment of capital (money or other valuable assets) of foreign investors in Vietnam to implement a project or another work for business purposes over a period of time. allowed by the State in different forms of investment.
Foreign investment means the investment of capital (money or other valuable assets) of a foreign investor in Vietnam to carry out a project or another project for the purpose of doing business over a period of time. allowed by the State under different investment forms.
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.
In addition, foreign investment also creates many advantages for Vietnam, accelerating the time of international market expansion, increasing export turnover, many garment products in Vietnam are imported to other countries in the world. from the world market to countries with developed economies, at the same time introducing international friends to our culture, attracting the tourism economy. Many foreign-invested enterprises have been established in association with domestic enterprises to create a global production network to help participate in the regional division of labor. Foreign investment also creates favorable opportunities for Vietnam to expand to international markets, increase export turnover, step by step participate in production networks and value chains in the world market, and affirm its position in the world market. Thanks to this orientation, exports of the foreign investment sector have increased rapidly, contributing to balance the trade balance, reducing exchange rate pressure and improving the balance of international payments.
Currently, many foreign-invested enterprises have partly contributed to the process of training professional and qualified staff to be able to meet the needs of employers, thereby creating motivation. for the workforce to invest in their own qualifications and skills, thereby creating a highly professional workforce. Specifically, at many enterprises, many of the positions previously held by foreign experts have now been replaced by Vietnamese experts, thereby partly contributing to hunger eradication and poverty reduction, creating jobs. employment for many individuals.
Some limitations of foreign investment in Vietnam
Firstly, 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.
Third, at present, there are still not many foreign enterprises investing in Vietnam, but the scale is still small, or medium compared to other regions. Some projects also consume energy, use resources, cause pollution or have a great impact on the health of workers. Many projects use high technology, source technology, the amount of investment for the project has not developed strongly. The first corporations only invested in a few key industries, others have not been strongly invested, priority areas have not been applied with more advanced and modern technologies compared to leading countries to environmental pollution.
Fourth, the quality of human resources and infrastructure are still inadequate, the number of foreign experts entering Vietnam to perform work, or projects are given priority because our country’s labor force is not yet qualified to meet the requirements of investors. The state management of foreign investment still has many shortcomings, lack of coordination from central to local. The land use efficiency of many projects has not been met, many legal issues are still binding, and many conditions have not been created for foreign investors to have the opportunity to invest in potential projects.
Fifth, at present, many investors have not ensured the legitimate rights and interests of Vietnamese workers, recruited foreign workers, and have not ensured the legitimate rights of Vietnamese workers according to the laws of our country. Because of this situation, it has led to many serious consequences, labor relations in many times become tense, causing political instability, local socio-economic conditions, adversely affecting the business environment. investment in Vietnam.
Business investment policies
• Investors have the right to conduct business investment activities in industries and trades not prohibited by this Law. For conditional business lines, investors must meet the conditions for business investment as prescribed by law.
– Investors are entitled to make their own decisions and take self-responsibility for business investment activities according to the provisions of this Law and other relevant laws; may access and use credit capital, support funds, and use land and other resources as prescribed by law.
• Investors shall be suspended, stopped or terminated their business and investment activities if these activities are harmful or are likely to cause harm to national defense and security.
• The State recognizes and protects investors’ ownership of assets, investment capital, income and other lawful rights and interests.
• The State treats investors equally; adopt policies to encourage and create favorable conditions for investors to conduct business investment activities, and to develop sustainably economic sectors.
• The State respects and implements international treaties on investment to which the Socialist Republic of Vietnam is a contracting party.
Conditional business lines:
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.
Regulations on business investment conditions must contain the following contents:
+ Subjects and scope of application of business investment conditions;
+ Form of application of business investment conditions;
+ Contents of business investment conditions;
+ Dossier, order and administrative procedures to comply with business investment conditions (if any);
+ State management agencies, agencies competent to handle administrative procedures for business investment conditions;
+ Validity period of permits, certificates, certificates or other written confirmations and approvals (if any).
Conditions for business investment are applied in the following forms:
+ License;
+ Certificate;
+ Certificates;
+ Written confirmation and approval;
+ Other requirements that economic individuals and organizations must meet in order to conduct business investment activities without having to be certified in writing by a competent authority.
• Lines and trades with conditional business investment and business investment conditions for such lines and trades must be posted on the National Business Registration Portal.
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Frequently asked questions
Pursuant to the provisions of Article 53 of the Law on Investment in 2020, the following industries are prohibited from investing abroad:
“Article 53. Industries and trades banned from offshore investment
Lines and trades banned from business investment are specified in Article 6 of this Law and relevant international treaties.
Industries and trades with technologies and products banned from export according to the provisions of law on foreign trade management.
Lines and trades banned from investment and business in accordance with the law of the host country”.
The Investment Law 2020 stipulates the following specific forms of investment:
Investing in the establishment of economic organizations;
Investment in capital contribution, purchase of shares, purchase of contributed capital;
Implementation of investment projects;
Investment in the form of BCC contract and other forms of investment, new types of economic organizations according to the Government’s regulations.
In the process of consulting and supporting participation in freshwater investment projects, it is necessary to clarify a number of issues as follows:
First: The issue of investors’ nationality. Nationality is the first factor that needs to be kept in mind when participating in investment projects, clarifying the nationality of foreign investors we can determine about the Free Trade Agreement that will be used. application and regulation or intergovernmental instruments to be applied. Because not all investors from any country have the same rights when investing in Vietnam, often in practice there will be differences in the decisions of the Government of Vietnam regarding investment in Vietnam. investors from WTO Member States and Non-WTO Members. This distinction is not regulated into a policy or actual legal regulation, but is very evident when explaining the satisfaction of investment conditions in the process of implementing the procedures for establishing an enterprise with investment capital. foreign.
Second: Determine what business the investor plans to do. Referring to this issue because according to the law, there are a number of business fields that are prohibited from investment, restricted from investment, or subject to conditional business applicable to investors, so before implementing the project, Investment projects need to learn carefully about the business field that investors want to carry out when carrying out the procedures for applying for an investment project.
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