The Ministry of Planning and Investment (MPI) has recently organised a meeting with domestic and foreign investors to discuss problems associated with the new Investment Law in HCM City.

At the meeting, Nguyen Van Lai, General Director of Tovecan joint venture company, said that though the new Investment Law had been in effect for more than one year his joint venture still couldn’t transform the joint venture under the regulations of the new law because of objective and subjective reasons.

According to the new Investment Law, the legal representative of a joint venture business must be the Chairman of the Board of Directors or the General Director and this person must reside in Vietnam.

Meanwhile, the Chairman of Tovecan, which includes three partners from Vietnam, Taiwan and Japan, is a foreigner who doesn’t live often in Vietnam. Normally, if the Chairman doesn’t reside in Vietnam and can’t play the role of the legal representative for the business, the General Director will replace him.

However, it is not simple for Tovecan because the firm’s General Director is a hired personnel and no employer dares to let his hired employee be his legal representative when regulations on legal representation are not clear.

Mr. Lai said that his company had sought documents related to the responsibility and duties of the legal representative so that the company could give this role to its hired General Director.

“However, we have searched for a long time but haven’t been able to find any regulation associated with it while the law only mentions the legal representative and doesn’t explain the responsibilities and duties of the legal representative,” Mr. Lai said.

The new Investment Law has created urgent matters for foreign investors. Tran Thanh Liem, from the Investment Promotion and Consulting Centre of Long An province, said that even domestic investors couldn’t stand it so how could foreign investors.

He said that foreign investors, especially overseas Vietnamese investors, always complained to him about the difference between the new Investment Law and the Land Law.

The new Investment Law allows foreign investors to re-lease land but this regulation can’t be implemented at localities. A foreign investor who has a project in the southern province of Long An ran between local departments to ask for an investment certificate but he was always refused.

The local agencies explained that the Land Law didn’t allow foreign investors who hire land and pay land rental fees on an annual basis to re-lease the land, unless they had paid all land rental fees.

Also related to land, overseas Vietnamese investors are also considered foreign subject and are permitted to hire land but not to be allocated with land like local investors, Mr. Liem said.

Overseas Vietnamese investors who previously registered for investment under the former Law on Domestic Investment Encouragement are still allocated land under the new Investment Law but those who previously registered investment under the former Law on Foreign Investment are not permitted to enjoy this privilege.

“The new Investment Law states that investment licencing must be within 15 days of the day businesses submit applications but in fact, this process is several months because of impediments from policy implementing agencies,” Mr. Liem said.

Pham Manh Dung, Head of the Legal Department under the MPI, said that there had been many complaints from investors since the new Investment Law was applied, mainly related to formalities.

In addition, the new Investment Law also conflicts with other laws and Vietnam’s WTO commitments and its implementation is sowing discontent among ministries and agencies.

Local licencing agencies are very confused about granting licences for finance and banking projects because the new law requests $10 million of investment capital but Vietnam’s WTO commitments request $25 million. This is one problem for the implementation of the new Investment Law related to finance and banking operations.

The MPI is compiling a decree guiding the implementation of the new Investment Law under Vietnam’s WTO commitments. At present, according to Mr. Dung, when licencing domestic and foreign projects, provinces and cities must give priority to perform WTO commitments while applying legal regulations.