New decree to resolve barriers to FIE operations
New decree to resolve barriers to FIE operations
A decree that the Ministry of Planning and Investment is drafting to guide the implementation of the 2014 Law on Investment includes a separate chapter on how the rules will be applied specifically to foreign investors.
The ministry’s drafting committee hopes to abolish conditions that do not fit the current context, and remove policies issued by government agencies that are not within their authority to issue, as well as amend and add conditions in order to ensure the freedom for foreign investors to do business in sectors they are entitled to operate in.
Besides conditions that are common for both domestic and foreign-invested enterprises (FIEs), FIEs have to satisfy a range of other conditions. According to Deputy Minister of Planning and investment Nguyen Van Trung, that’s because before setting up an economic entity the foreign investor also has to have an investment project and secure an investment certificate and in order to do so they have to meet a list of other requirements such as providing capital and being able to meet the requirements of specific investment projects.
“These requirements are very necessary, not only to formalise the application of conditions to do business for foreign investors but to also contribute to raising the transparency of the legal system concerning investment and business,” Trung said.
Of the 267 sectors and fields subject to conditions stipulated in the new Law on Investment, there are 72 for which Vietnamese laws already stipulated conditions to do business and invest, 46 for which Vietnam’s international agreements have stipulated conditions to invest applying to FIEs, 128 for which no law has stipulated conditions for investment for FIEs and 21 for which no law has stipulated conditions to invest and to do business for FIEs.
In addition, there are 35 sectors which international agreements stipulate limited participation by FIEs but Vietnamese laws still do not.
As a result, there has been much confusion over the current list of conditions. For example, one of the many conditions for the insurance and reinsurance sector requires foreign non-life insurers wishing to set up a branch in Vietnam to have the total asset of at least $2 billion and have operated in the non-life insurance business for at least 10 years. But these conditions do not meet Vietnam’s commitments in free trade agreements and the Trans-Pacific Partnership. Will these conditions be changed?
Plastic surgery is one of the 21 sectors and fields that have yet to have any conditions to invest and do business. According to Vietnam’s WTO commitments, foreign plastic surgery service providers are allowed to provide this service by establishing a 100 per cent foreign-owned hospital, a joint-venture hospital with a Vietnamese partner or by entering a co-operation contract with a Vietnamese partner. The minimum investment for a hospital is $20 million, while that for a clinic is $2 million. But as of now Vietnam has yet to have any conditions on business in this field. What will regulate plastic surgery and the remaining 20 sectors and fields?
Casinos are on the list of 128 sectors and fields for which no law has stipulated conditions for investment for FIEs. As of now, the decree on casinos is still being drafted.
