The Ministry of Planning and Investment (MOPI) has announced the amended draft Investment Law to create a more favorable and transparent environment for investors and to restrict transfer pricing and abandoned projects.
To ensure stability and fairness, the draft law does not discriminate between domestic and foreign investors. In case the law changes, the incentives for investors will be maintained.
According to the World Bank, the protection mechanism for investors is one of the issues that Vietnam needs to improve to create a safe, reliable and attractive investment environment.
The draft law encourages foreign investment in high technology, new technology, agriculture, forestry and fishery production, supporting industries and high value-added products
The draft law also deals with problems in investment, land and construction procedures to shorten the time to fulfill paperwork.
The draft Investment Law also proposes more stringent regulations to limit the downside of foreign direct investment, including the transfer pricing.
After 12 months when the investment registration certificate is granted, if investors do not implemented the project according to schedule, the management agencies will revoke the investment certificate.
If the draft Investment Law is approved, it will take effect from July 1, 2015.
However, the projects and FDI businesses operated before July 1, 2015, will continue to perform under the Investment Law 2005.
Vietnam currently faces severe competition in attracting foreign investment while the national competitiveness is limited. According to the World Bank’s ranking of global business environment released last October, Vietnam ranked 99th out of 189 economies.
The WB said that Vietnam’s ranking has not changed since 2005 though it has so far made 21 reforms, the most in East Asia-Pacific region.