New re-registration rule puts 800 FDI firms at stake
New re-registration rule puts 800 FDI firms at stake
Nearly 800 foreign direct investment (FDI) companies in HCM City are on the verge of dissolution or suspension as they have not been able to renew their business registrations over new cumbersome procedures
“This is a very urgent situation because the lifetime of many FDI companies has only one month left according to their investment certificates,” said the HCM City government in a petition sent to the prime minister last week.
Since July 1, 2011, the deadline for business re-registration under the Enterprise Law and the Investment Law, the city government has received almost no re-registration requests from foreign-invested firms.
There are three enterprises having written to the city government seeking permission to extend their operations. They are Saigon Joubo Textile Joint Venture Co., SKF Vietnam and RMIT University Vietnam.
These are among hundreds of FDI enterprises in need of re-registration to carry on their business operations but they have failed in their attempt because of the prevalent regulations, said the city government.
As of June 30 last year, there had been 784 FDI companies granted investment certificates prior to July 1, 2006, accounting for 20 percent of the total still allowed to do business in the city.
Twenty seven firms will see their investment certificates falling due this year, while the number for the 2013-2020 period is 174. The entities that have yet to renew their certificates are active in the fields of processing, manufacturing and production, which use a lot of labour and make up a large proportion in the city’s economy.
Most of the FDI companies established before July 1, 2006 have been operating efficiently. They have poured much capital into production lines, machinery, equipment, technology and infrastructure.
“The fact that 800 enterprises in the city are facing the risk of dissolution for failure in applying for business re-registrations will leave a major impact on the socio-economic situation. Many workers will become jobless, causing a fall in tax collections and an economic instability, adversely affecting the investment environment,” says the petition.
For the FDI companies to continue their businesses, the city requested the prime minister to grant them new investment certificates with a revised operational time. This way, FDI firms will be able to operate in the business fields they have registered, but no longer enjoy investment incentives until new regulations are introduced.
Another solution is that enterprises will be awarded investment certificates for new business establishment. As such, they will have new names but their business fields will remain unchanged.
Saigon Times Daily