Notable Improvements in Vietnam Investment Law 2014

Vietnam Investment Law 2014 taking effect from July 1st, 2015, replaces the Investment Law 2005 with notable improvements, especially the provisions on business registration in investment projects which foreign investors making investment in Vietnam or setting up business in Vietnam are welcome.

The new Vietnam Investment Law in 2014 has brought up the concept of “business investments” to replace the previous two concepts as “direct investment” and “indirect investment”.

Under the Investment Law 2005, prohibited investment sectors are generally and broadly defined i.e. detrimental to defense and security, national interests which are vague concepts subject to arbitrary explanation of the Vietnam State authorities. The prohibited business activities in the new regulations are listed down specifically.  This change has been considered as a huge development which confirm that the foreign investors have the right to conduct investment in Vietnam in the segments not prohibited by law.  The new law specifies 267 conditional investment areas which clearly define the restrictions in one document instead of referring to various laws.  This shall also avoid different interpretations of the legal enforcement and application of the laws in Vietnam.

According to the Vietnam Investment Law 2005, regardless of the proportion of foreign invested capital, all projects involving foreign ownership are subject to investment certificate. Under the new law, only the projects of foreign investors or enterprises with foreign investment capital contributed 51% of charter capital or more must apply for new registration certificate for the project investment of foreign investment. This is a big step to attract and encourage investment for foreign investors investing in Vietnam through reducing the amount of administrative formalities which foreign investors had to go through.

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