When a foreign investor prepares an investment project in Vietnam, if it is required to apply for investment policy approval in accordance with the Law on Investment, such project must be approved by competent state agencies before being granted the Investment Registration Certificate. Depending on the field of investment, the size of the project, the land demand, the extent of the environmental impact, the authority to approve the investment policy belongs to the National Assembly, the Prime Minister or Provincial People’s Committee Compared to projects subject to the investment approval authority of lower-level agencies, projects subject to the approval authority of the National Assembly are often the projects with the largest scale and the largest impact on the environment as well as population.
1. Projects subject to the approval of investment policy of the National Assembly
According to Article 30 of the Law on Investment 2020, except for projects subject to investment policy decision of the National Assembly under the Law on Public Investment, the National Assembly shall approve investment policies for the following investment projects:
1.1. Investment projects that exert great effects or potentially serious effects on the environment, including:
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- Nuclear power plants;
- Projects that require repurposing of special-use forests, headwater protection forests or border protection forests of at least 50 hectares; of sand-fixing and windbreak coastal forests or protection forests for wave prevention of at least 500 hectares; or production forests of at least 1,000 hectares;
1.2. Investment projects that require repurposing of land meant for wet rice cultivation during with 02 or more crops of at least 500 hectares;
1.3. Investment projects that require relocation of 20,000 people or more in mountainous areas or 50,000 people or more in other areas;
1.4. Investment projects that require application of a special mechanism or policy that needs to be decided by the National Assembly.
2. Application for investment policy approval of the National Assembly
The Investor must prepare documents for investment policy approval of the National Assembly in accordance with Law on Investment 2020[1] which includes:
(a) An application form for execution of the investment project, including a commitment to incur all costs and risks if the project is not approved;
(b) A document concerning the legal status of the investor;
(c) Document(s) proving the financial capacity of the investor including at least one of the following documents: the investor’s financial statements for the last two years; commitment of a parent company to provide financial support; commitment of a financial institution to provide financial support; guarantee for the investor’s financial capacity; other document proving the investor’s financial capacity;
(d) Proposal for the investment project including the following main contents: investor or method of investor selection, investment objectives, investment scale, investment capital and plan for raising capital, location, duration and schedule of the investment project, information about the current use of land in the location of the project and proposed demand for land use (if any), demand for labor, proposal for investment incentives, impact and socio – economic efficiency of the project and preliminary assessment of environmental impact (if any) in accordance with the law on environment protection.
(e) If the law on construction requires formulation of a pre-feasibility study report, the investor is entitled to submit the pre-feasibility study report instead of a proposal for the investment project;
(f) If the project does not require the State to allocate or lease out land or to permit land repurposing, a copy of the document regarding the land use rights or other document identifying the right to use the location for execution of the investment project is required to be submitted;
(g) Contents of the explanation for the technology to be used in the investment project if the project requires appraisal and collection of opinions on the technology in accordance with the Law on Technology Transfer;
(h) The business cooperation contract if the investment project is executed under a business cooperation contract;
(i) Other documents relating to the investment project, and requirements on the eligibility and capacity of the investor in accordance with law (if any).
3. Procedures for investment policy approval by the National Assembly[2]
- Step 1: The Investor(s) shall submit the application and other relevant documents to the Ministry of Planning and Investment.
- Step 2: Within 15 days from the date on which the sufficient application is received, the Ministry of Planning and Investment shall submit a report to the Prime Minister and request establishment of a State Appraisal Council.
- Step 3: Within 90 days from the date of its establishment, the State Appraisal Council shall organize appraisal of the application and prepare an appraisal report including the contents set out in Article 33 of Law on Investment 2020, then submit the same to the Government.
At least 60 days before the opening of the meeting of the National Assembly, the Government shall prepare an application for investment guideline approval and submit it to the National Assembly’s agency presiding over validation.
Substances of validation of the request for investment policy approval include:
(a) Fulfillment of the criteria for determining that the investment project is subject to approval for its investment guidelines by the National Assembly;
(b) Necessity of executing the investment project;
(c) Conformity of the investment project with national planning, regional planning, provincial planning, urban planning and special economic – administrative unit planning (if any);
(d) Objectives, scale, location, duration, execution schedule of the investment project, demand for land use, land clearance and relocation plan, options to select primary technologies, and solutions for environmental protection;
(e) Capital investment and capital sources;
(f) Assessment of socio-economic efficiency, national defense, security assurance and sustainable development of the investment project;
(g) Special policies and mechanisms; investment incentives, investment assistance and conditions for application thereof (if any).
In fact, projects subject to the approval of investment policy of the National Assembly will take a lot of time for the complicated licensing procedures. Therefore, Investors need to prepare carefully and fully in all aspects when planning to invest in Vietnam in projects under the authority of the National Assembly to approve investment policies as mentioned above.
[1] Law on Investment 2020, Article 33.1
[2] Law on Investment 2020, Article 34
