Deposits under the Investment Law 2020

Investors must make deposit or get the bank guarantee for deposit obligations for implementation of investment projects. In particular, in what cases do investors must make deposit?

1. Cases of deposit in investment

In accordance with Clause 1, Clause 4, Article 77 of the 2020 Investment Law, Clause 1, Article 25 of the Decree No. 31/2021/ND-CP

Investors shall make deposits or obtain bank guarantees for deposit obligations for securing the implementation of projects that request the State to allocate or lease land or to permit change of land use purposes, except in the following cases:

- Investors win the auction of land use rights to implement investment projects that are allocated land with land use levy or leased land by the State with one-off payment of land rental for the entire lease period;

- Investors win the bidding for the implementation of land-using projects;

- Investors are allocated or leased land by the State on the basis of receiving the transfer of investment projects for which deposits have been made or capital contribution or mobilization has been completed according to the schedule indicated in the written approvals of investment policy and investment registration certificates;

- Investors are allocated or leased land by the State to implement investment projects on the basis of receiving land use rights or land-attached assets transferred from other land users.

- Investment projects have been approved or leased in accordance with law provisions before July 01, 2015 and in the cases of guarantee for investment project implementation.

Therefore, investors must make deposit in the implementation of projects of land allocation and lease or projects that are allowed to transfer the land-use purpose.

Note: In case an investor adjusts objectives or implementation schedule of an investment project, or changes the land use purpose after October 01, 2021, it/he/she shall pay a deposit or obtain a bank guarantee on the obligation to pay a deposit.

2. Forms of deposit for implementation of investment projects

The investor's obligation to ensure the project implementation shall be performed on the basis of a written agreement between the investment registration agency and the investor (Clause 1, Article 26 of the Decree No. 31/2021 of the Government).

Accordingly, the agreement on security for implementation of investment projects includes the following principal contents:

- Name of the project, objectives, location, scale, investment capital, implementation schedule, operation duration of the investment project as prescribed in the decision on approval of investment policy, decision on concurrent approval of investment policy and investor or investment registration certificate;

- Security measures for implementation of investment projects;

- The amount of security for implementation of investment projects;

- Time and term of security for implementation of investment projects;

- Conditions for reimbursement, adjustment or termination of security for implementation of investment projects;

- Handling measures in the cases;

- Other rights, obligations and responsibilities of parties;

- Other contents as agreed by both parties but must not be contrary to laws.
 

3. Level of deposit for implementation of investment projects

In accordance with the Clause 2, Article 43 of 2020 Investment Law and Clause 2, Article 26 of the Decree No. 31/2021/ND-CP

- Depending on the size, characteristics and implementation schedule of each investment project, the level of deposit for securing the implementation of an investment project shall range between 1% and 3% of the project’s investment capital, in particular:

+ For the capital portion of up to VND 300 billion, the security percentage is 3%;

+ For the capital portion of between over VND 300 billion and 1,000 billion, the security percentage is 2%;

+ For the capital portion of over VND 1,000 billion, the security percentage is 1%.

- In case an investment project is to be implemented in different stages, deposit amounts shall be paid and reimbursed according to the implementation progress of the investment project, except cases ineligible for deposit reimbursement.

Within that, the project’s investment capital includes: Land use levy, land rental paid to the state and construction costs of works under investment projects that investors are obliged to hand over to the state for management after completion (if any).

At the time of signing the agreement on security for implementation of an investment project, if the construction costs of works handed over to the state have not yet been determined accurately, the investment registration agency shall base on cost estimate as stated in the project proposal made by the investor to determine the security for implementation of such investment project.