Special Investment Procedure under the Amendment to the Law on Investment (Vietnam)

Special investment procedure (“SIP”)

Law 57 supplements Article 36.a of the LOI, which sets out the conditions and content of the SIP. Except for the projects of which the investment policies must be approved by the National Assembly pursuant to Article 30 of the LOI, investors may choose to register their investment projects under the existing normal investment procedures (“NIP”) or the SIP. In order to be eligible for the SIP, a project mut meet the following conditions in terms of investment sector and location:

• Sector, product: The project must be (i) an investment in innovation centers, research and development (R&D) centers; semiconductor integrated circuit industry, design technology, production of components, integrated electronic circuits (IC), flexible electronics (PE), chips, semiconductor materials; or (ii) an investment in high-tech sectors which are given priority in development (“List of High-tech Sectors”) or investment in the production of products included in the list of high-tech products (“List of High-tech Products”). The List of High-tech Sectors and the List of High-tech Products are decided by the Prime Minister. In this regard, the Prime Minister had issued Decision No. 38/2020/QD-TTg on 30 December 2020 to promulgate the List of High-tech Sectors and List of High-tech Products. The List of High-tech Sectors covers 99 sectors/technologies such as AI, IoT, blockchain, big data, geoinformatics, building information Model-BIM, photovoltaics, hydrogen energy, power microgeneration, non-traditional manufacturing, precision agriculture, smart grids etc. The List of High-tech Products covers 107 products such as blockchain equipment and software, cognitive radio equipment and software, plant simulation for vehicles, advanced molds, molecular analysis and diagnostics system, upcycling polymers, self-healing materials, functional materials etc.
• Location: The investment project must be located in industrial parks, export processing zones, high technology parks, concentrated information technology parks, free trade zones, or functional areas in economic zones.

Like in the NIP, in order to register the project under the SIP, the investor must submit the investment registration dossier to the Board of Management of the industrial park, export processing zone, high technology park, or economic zone (“BOM”) where the project is located. The dossier must contain the documents specified in Article 33.1 of the LOI, of which the “Request for Project Implementation” must be made in the prescribed format and, in particular, for the purpose of the SIP, must include additional contents (i.e., commitments to comply with the conditions, standards and provisions of the laws on construction, environmental protection, fire prevention and firefighting; proposal for the investment project including, identification and forecast of environmental impact and measures to minimize negative impact). The BOM will review the suitability of the project with the investment sector and relevant planning authorities, legal status and experience of the investor, land use requirements, schedule of the project implementation, investor’s commitments, and investment incentives (if any). The regulatory timeframe for BOM to issue an Investment Registration Certificate (“IRC”) is 15 days from the date on which they receive the application.

Currently, the procedures required for the implementation of a project are not only regulated by the LOI, but also regulated by other laws, such as laws on land, construction, environment, technology transfer, fire prevention and firefighting. In order to start a project, the investors must go through multiple stages and procedures under these laws. Each procedure has its own requirements in terms of documentation, steps, and time. Some procedures must be performed sequentially, the result of one procedure being the input for another. In their Explanatory Report dated 29 August 2024 on the draft of Law 57, the Ministry of Planning and Investment※1 admitted that it takes an average of 250 to 350 days or more for investors to complete all the relevant procedures to put their investment projects into operation.

Registration of an investment project under the SIP allows investors to “skip” the following relevant procedures: Investment Policy Approval procedure (“IPA”), technology assessment, preparation of environmental impact assessment reports, preparation of detailed design, issuance of construction permits, and procedures for approval, acceptance and licensing in the areas of construction, fire prevention and firefighting. Please refer to the table below for further details:

The supervision and management of investment projects registered under the SIP by the state authorities will be changed from a pre-control mechanism to a post-control mechanism. Investors will be responsible for implementing their projects in accordance with the IRCs, their commitments in relation to construction, environmental protection, fire prevention and firefighting. If an investment project fails to meet the conditions, standards and technical regulations to which its investor has committed, the competent state authorities may consider imposing administrative sanctions, suspending or terminating the project.

Conclusion

The SIP will significantly simplify and shorten the time and efforts required for investors to set up their investment projects. In the future, this is expected to increase Vietnam’s competitiveness in attracting foreign investment in high-tech sectors.