Foreign investment in Vietnam – how is it guaranteed by law?

One of the main concerns of foreign investors investing in other countries is the investment guarantee for their business. In order to ensure that foreign investors can safely invest in Vietnam, Vietnamese laws have provided a number of guarantees to foreign investors when investing in Vietnam.

Below are typical guarantees for foreign investors when investing in Vietnam

  1. Guarantees for asset ownership[1].

The legitimate assets of foreign investors will not be nationalized or confiscated by administrative authority. Unless they are redeemed or requisitioned by the State for reasons of national defense, security, national interest, state of emergency, management of natural disasters, investors will be reimbursed or compensated in accordance with the provisions of the law.

The purchase price will be determined at the most current market price with the same types and technical standards, quality and origin at the time of the decision to purchase these assets. Claim assets will be returned after the claim period expires. There will be compensation for damage caused by the requisition.

  1. Guarantees for the investment activities of companies[2]

Foreign investors are not required by the state to exercise the following conditions:

  • Prioritize the purchase or use of national goods / services; or buy or use only goods / services supplied by domestic producers / service providers;
  • Achieve a certain export target; restrict the quantity, value, types of goods / services that are exported or produced / supplied in the country;
  • Import a quantity / value of goods equivalent to the quantity / value of goods exported; or balance foreign exchange earned on exportation to meet import demands;
  • Achieve a certain rate of import substitution;
  • Achieve a certain level / value of national research and development;
  • Provide goods / services to a particular location in Vietnam or abroad;
  • Have the registered office at a location requested by a competent authority.

In addition, depending on socio-economic conditions and investment attraction demands in each period, the Prime Minister decides to apply forms of state guarantee to execute investment projects subject to approval. their investment guidelines by the National Assembly, the Prime Minister, and other major investment projects on infrastructure development.

  1. Guarantees for the transfer of foreign assets abroad [3].

Once all financial obligations to the Vietnamese government have been met, foreign investors are allowed to transfer the following assets abroad:

  • Investment capital and proceeds from the liquidation of its investment;
  • Their income from the investment activities of companies;
  • Money and other assets legally owned by investors.
  1. Guarantees for business investment during changes in laws [4]

When a new law provides for more favorable investment incentives, foreign investors have the right to take advantage of the new incentives for the remaining period of the project’s incentive enjoyment, with the exception of special investment incentives for investors. investment projects in the event that investment projects that have been obtained an investment certificate, investment registration certificate or investment policy decision before the date of entry into force of the law on the 2020 investment (January 1, 2021);

When a new law that provides less favorable investment incentives than those previously enjoyed by investors is enacted, foreign investors will continue to benefit from the current incentives for the remaining period of the project’s incentive enjoyment.

The above regulations do not apply if the regulations of a legal document are changed for reasons of national defense and security, social order and security, social ethics, public health, or human protection. the environment. In this case, foreign investors will face one or more of the following measures:

  • Deduct the loss actually suffered from the taxable income of the foreign investor
  • Adjust the objectives of the investment project;
  • Help the foreign investor to repair the damage.

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