Resolution No. 103/NQ-CP of August 29, 2013, on orientations for higher efficiency of foreign direct investment attraction, use and management in the coming period

THE GOVERNMENT

Resolution No. 103/NQ-CP of August 29, 2013, on orientations for higher efficiency of foreign direct investment attraction, use and management in the coming period

In the past time, foreign direct investment (FDI) has positively contributed to Vietnam’s growth and development. By June 2013, there had been 15,067 effective projects with a total registered capital of about USD 218.8 billion and the implemented capital of around USD 106.3 billion. FDI has become an important additional source of the society’s total investment capital (accounting for about 23.3% of the society’s total investment capital in 2012, contributing to increasing production capacity of some sectors, renovating technology, improving economic management and business administration, increasing export turnover (accounting for around 64% of 2012’s total export turnover), restructuring exports, improving the international payment balance and contributing to the budget (about USD 3.7 billion in 2012), developing high-quality human resources and generating jobs (over 2 million direct laborers and 3-4 million indirect laborers), etc. At the same time, FDI has also exerted spill-over impacts on other sectors of the economy, spurring domestic investment resources, restructuring the economy, reforming state enterprises, renewing the administrative procedures, completing the market economy institutions and boosting international economic integration. Through foreign investment cooperation, Vietnam has enhanced its political and foreign relations and developed friendly ties with many countries, territories and partners around the world.

Nevertheless, the FDI attraction has so far failed to achieve the expected targets of attracting high technologies, source technologies, supporting technologies, infrastructure development investment and technology transfer. The quality of FDI projects is generally not high and their added value is low. They are mainly of medium and small scale. The investment based on production lines by transnational groups remains limited. A number of FDI enterprises have used obsolete and polluting technologies. Some have manifestations of employing the mode of transfer pricing for tax evasion, thus causing losses of budget revenues; or fail to ensure the legitimate interests of laborers, etc.

The above-mentioned limitations are attributed mainly to the legal and policy systems which still have many asynchronous, overlapping and inconsistent provisions, and to the fact that Vietnam has not yet been proactive in and properly prepared necessary conditions for assuring the effective operation of FDI, such as infrastructure, human resources, domestic enterprises, planning, rational technical barriers, etc. The appraisal and grant of investment certificates in some cases are not strict, failing to fully comply with planning and the capacity of the technical and social infrastructure systems. The inspection, examination and supervision of FDI projects remain irregular and ineffective. Methods of investment promotion are slow to be renewed, investment promotion activities from central to local levels have not yet been closely coordinated and prove to be inefficient. On-spot investment promotion through supporting licensed projects to be implemented in a convenient manner has not been given due attention. Vietnam’s investment environment has revealed a number of limitations, becoming less competitive than many regional countries.

In face of the above-mentioned situation and in order to  suit the new context and raise the competitiveness of Vietnam’s investment environment, the Government requests ministries, sectors, central agencies and provincial-level People’s Committees to thoroughly grasp the viewpoints and orientations and concentrate on directing and organizing the implementation of the major solutions below:

I. VIEWPOINTS AND ORIENTATIONS ON FOREIGN INVESTMENT IN THE COMING PERIOD

1. Viewpoints

- Foreign-invested economy constitutes a part of the national economy, is encouraged by the State for long-term development, has its rights and legitimate interests guaranteed and is equally treated on the basis of cooperation for mutual benefit and fulfillment of Vietnam’s international commitments.

- FDI constitutes an important resource of the economy and joins the domestic resources in creating the aggregate strength for the attainment of the objectives of national industrialization and modernization and economic restructuring.

- FDI attraction must ensure conformity with planning and the concentrated and unified direction of the central government in couple with rational decentralization to localities on the basis of socio-economic conditions and the capability and quality of officers,..; special importance must be attached to the effectiveness of the state management through inspection and supervision to ensure the strictness of law.

- The revision of foreign investment policies and laws must adhere to the principle of making them more and more competitiveness, favorable and preferential.

2. Orientations

a/ To create vigorous changes in FDI attraction in the direction of selecting projects with high quality and added value and using modern and environment-friendly technologies, especially information technology and bio-technology to serve agriculture; developing infrastructure, training high-quality human resources, conducting research and development, providing modern services, etc.

b/ To intensify the attraction of large-scale projects with highly competitive products and joining the global value chains of transnational groups, thereby building and developing supporting industries and enterprises; to encourage industrial projects to gradually shift from processing to manufacture; to select big and prestigious investors to develop the financial market; while attaching importance to medium- and small- scale projects suitable to each economic sector and each locality.

c/ To encourage, facilitate and promote the alignment among FDI enterprises and between FDI and domestic enterprises.

d/ To plan FDI attraction by sectors, fields and partners, suitable to the advantages of each region and each sector in order to promote the investment efficiency of each locality and each region in conformity with the overall planning, ensure the national interests and the economic restructuring after a new growth model.

II. SOME MAJOR SOLUTIONS

1. To complete the system of investment laws and policies to be consistent, public, transparent, predictable, favorable for investors and competitive as compared to regional countries

a/ To further complete the legal framework on investment:

- To study and revise the Investment Law in conformity with the socio-economic development requirements and the new context of international integration, serving as a legal basis for uniformly governing the investment process and procedures and the state management of investment activities. Specialized regulations will only govern the contents related to operational conditions for implementation of investment projects and the specialized state management.

- To study and revise the Enterprise Law to become more favorable and transparent for the establishment, operation and termination of enterprises of all economic sectors.

- To conduct an overall review of the current legal system, primarily the laws related to investment and business activities (such as the Land Law, the Construction Law, the Environmental Protection Law, the High Technology Law, the Technology Transfer Law, the Education Law, the Real Estate Business Law, the Housing Law,...), toward ensuring their consistency and synchronism with the Investment Law; to study and propose the promulgation of omnibus laws for revision of many laws and omnibus decrees for revision  of various related decrees with a view to immediately handling inadequacies and overlaps.

- To prescribe more clearly the peculiarities of investment procedures and conditions for foreign investors in order to create more favorable conditions for investors via transparent procedures, while ensuring the effectiveness of the state management of investment activities.

- To scrutinize the current regulations on acquisition and merger involving foreign elements, which exist in various legal documents, so as to synchronize and define them more specifically and clearly.

- To promulgate conditional investment sectors and specify the connotations of the conditions; to guide the implementation and application of Vietnam’s WTO commitments with regard to a number of services.

- To guide the re-registration of FDI enterprises toward facilitating their investment and business activities.

b/ To concentrate on amending investment incentive policies:

- To amend investment incentive policies, ensuring their systematicity from tax incentives (the Law on Business Income Tax and the Law on Export Duty and Import Duty) to financial and non-financial incentives; to ensure consistent tax and investment policies so as to heighten the competitiveness with regional countries in FDI attraction; to adjust subjects eligible for tax incentives toward linking sector-based incentives with territory-based ones in order to boost the labor distribution among localities; to apply selective investment incentives in line with the new orientations for FDI attraction; to study and add incentives for investment projects in industrial parks.

- To scrutinize and reduce unnecessary restrictions and to permit more participation in the capital and financial markets on the principle of efficiency and strictness.

- In addition to the grounds for consideration of sector-based and territory-based incentives, to study and add such criteria for consideration of investment incentives as projects in the supporting industries, projects with high added value, projects using more domestic raw materials and supplies and projects with commitments to transfer advanced technologies,...

c/ To adjust and add mechanisms and policies to encourage domestic private and foreign investors to invest in infrastructure:

- To examine and revise Decision No. 71/2010/QD-TTg of November 9, 2010, on the Regulation on experimental investment in the form of public-private partnership (PPP) and to revise the Government’s Decree No. 108/2009/ND-CP of November 27, 2009, on investment under Build-Operate-Transfer (BOT), Build-Transfer-Operate (BTO) and Build-Transfer (BT) contracts toward incorporating them into one decree with transparent, clear and easily applicable contents conformable with international practices.

- To expeditiously address current limitations in infrastructure use charges in the direction of ensuring recovery of invested capital, increasing the foreign currency conversion commitment and intensifying measures to support ground clearance, creating the maximum conditions for investors.

d/ To complete the mechanisms and policies on attraction of foreign investment in supporting industries:

In the immediate future, to promptly formulate and promulgate a new legal document replacing Decision No. 12/2011/QD-TTg of February 24, 2011, on policies for development of a number of supporting industries, in the direction of:

- Specifying supporting industries and their products, focusing on a number of key industries and products.

- Prescribing clear, understandable and transparent criteria for identification of sectors and products entitled to incentives for supporting industries.

- Studying and increasing incentives attractive to investment projects in the supporting industries on the Government-promulgated list of supporting industries and products, as well as projects using many domestic supplies and raw materials.

Concurrently, to study and formulate a Law on Encouragement and Development of Supporting Industries.

dd/ To complete the mechanisms and policies to encourage and attract projects using high and appropriate technologies into Vietnam, while ensuring the control of imported technologies:

- To expeditiously review and revise current legal documents (the Law on Science and Technology and the Law on Technology Transfer), aiming to encourage and attract foreign investors to invest in projects using high and modern technologies suitable to Vietnam’s conditions.

- To complete legal documents with a view to encouraging and facilitating technology transfer activities; at the same time to raise the effectiveness of the state management of these activities, preventing the pricing transfer through technology transfer contracts.

- To enhance the enforcement and protection of intellectual property rights. To expeditiously implement solutions for raising the capability and effect of the system of intellectual property right enforcement and protection nationwide.

- To study, amend and supplement regulations on criteria of hi-tech enterprises toward adjusting and concretizing the hi-tech criteria suitable to Vietnam’s practical conditions, taking into account large-scale projects generating large annual turnover and employing many high-quality workers.

- To study, amend and supplement regulations on import of machinery and equipment, including used ones, toward intensifying the use of instruments of assessment and re-assessment; to formulate regulations on import standards and stringent penalties in order to prevent the import of obsolete, energy-consuming, polluting and human health-affecting machinery and equipment.

- To intensify the state management of controlling imported machinery, equipment and technologies. To periodically organize the assessment of technological levels of different sectors for identifying sectors prioritized for FDI attraction.

e/ To complete regulations and guidelines on environmental control:

- To review, revise and complete the system of national technical standards on energy consumption and loss, environment and environmental impact assessment applicable to investment sectors causing greenhouse effects and environmental pollution.

- To promulgate regulations on environmental pollution prevention and reduction and  environment surveillance, regulations on emission limits and enterprises obliged to disclose information on environment and solutions for treating emission volumes.

- To complete mechanisms and policies on environmental management. To intensify the guidance, monitoring and inspection of enterprises in the observance of law on environmental protection.

- To perfect regulations on penalties which are strong enough to deter violations of the environmental protection law. To study the addition of penalties based on actual discharge volumes instead of the current maximum and minimum sanctioning levels.

- To formulate mechanisms and policies to attract investment in the treatment of exhaust gas, wastewater and solid waste and urban environment sanitation,...

g/ To complete the regulations aiming to raise the effect and efficiency of management of foreign exchange and credit:

- To develop mechanisms for supervising total domestic and foreign loans of FDI enterprises in relation to the total investment levels of projects.

- To complete the legal basis related to the supervision of cash flows of FDI projects (including contributed capital in cash and domestic and foreign loans).

h/ To complete regulations aiming to enhance the management of workers in FDI projects:

- To draw up specific action programs for human resource training and cooperation with enterprises in vocational training to meet the employment requirements of enterprises.

- To encourage FDI enterprises to provide job training for their workers.

- To provide more favorable conditions for the grant of work permits for foreigners to work in Vietnam in sectors requiring high expertise, skills and technologies, which domestic employees cannot satisfy yet; at the same time, to work out mechanisms for encouraging enterprises to train domestic workers as substitutes for these foreign professionals.

- To intensify the state management of workers working for FDI projects and enhance the inspection and supervision of the observance of regulations on foreign workers and resolutely and severely handle in accordance with law foreigners illegally working in Vietnam.

i/ To complete regulations on land and housing:

- To study and formulate legal documents guiding the enforcement of the (revised) Land Law toward reducing the discrimination between foreign and domestic investors in their access to land; regulations on proactive recovery of land by the State under the publicized land use master plan and plans, the organization of compensation and resettlement support in order to create “clean” land funds for proactive regulation of the land market and for use as a basis for proactive investment attraction and creating conditions for investors to access land funds; to continue with the reform of administrative procedures and establishment of the mechanism of transparency and publicity in land administration and use.

- To step up land auctions and biddings; to make a general review and classification of land-using projects; to resolutely recover the land and water surface areas already allocated to enterprises, including FDI enterprises, which have been left unused or used inefficiently for auctions, biddings or allocation to potential investors for more efficient investment and use.

- To study, amend or supplement a number of provisions of the Real Estate Business Law toward increasing the rates of investors’ equity; expanding the scope of real estate business to foreign investors; adding provisions on the form of contribution as capital of project development rights,...

- To study and supplement mechanisms and policies for management of, and formulate handling measures to prevent and restrict the transfer pricing of real estate business projects via hiring management services, subcontracting, etc.

- To review the implementation of Law No. 34/2009/QH12 on house ownership by overseas Vietnamese and the National Assembly’s Resolution 19/2008/QH12 on experimental permission of foreign organizations and individuals to own apartments in Vietnam, with a view to considering the expansion of foreign entities eligible to own real estates, loosening of conditions and simplification of the process and procedures for purchase and ownership of apartments and houses by foreign organizations and individuals in Vietnam; and permitting foreign investors of investment projects in Vietnam to buy apartments or houses in Vietnam in conformity with the duration of their projects in Vietnam.

- To formulate policies to encourage labor-intensive enterprises, together with other investors, to construct houses for lease to workers and related social infrastructure facilities.

k/ Ministries and sectors shall assess more concretely the impacts of Vietnam’s  commitment to fully open the market within the framework of the ASEAN Free Trade Agreement (AFTA) so as to identify sectors, fields and products that will have advantages and those that will face difficulties in the future, thereby to work out specific response policies.

2. To adjust a number of principles of investment management and decentralization

- The investment certificate-granting agencies shall strictly control the observance of master plans when granting the investment certificates for projects.

- To expeditiously formulate a mechanism for coordination in the state management of foreign investment, aiming to intensify the coordination between the Ministry of Planning and Investment and other ministries, sectors and provincial-level People’s Committees.

- To further complete the mechanism for decentralization of the grant of investment certificates, aiming to bring into play the dynamism, creativeness and accountability of localities while ensuring the central uniform management, concretely as follows:

+ To supplement the process of appraisal for projects under the investment-deciding competence of the Prime Minister, including large-scale projects with great spill-over effects on regional and national socio-economic development, projects using large land areas.

+ On the appraisal process: The investment certificate-granting agencies shall assume the prime responsibility for verification according to current regulations and submit to the Prime Minister the verification reports together with relevant dossiers; concurrently send them to the Ministry of Planning and Investment for independent appraisal. Based on the dossiers and verification reports of the investment certificate-granting agencies, the Ministry of Planning and Investment independently appraises the investment projects or for projects with complicated contents, involving many sectors and localities, the Ministry of Planning and Investment can gather comments of the investment certificate- granting agencies, concerned ministries, sectors and localities, experts and scientists.... The appraisal must focus on such principal contents as the observance of verification process and procedures and relevant law; the projects’ impacts on socio-economic development of region, the nation and sectors; the feasibility of resources for the projects ( labor, infrastructure, electricity, raw materials,...); capital mobilization capability,... The Ministry of Planning and Investment shall submit to the Prime Minister independent appraisal reports. The investment certificate-granting agencies shall grant investment certificates for projects after the Prime Minister approves the investment undertaking.

- To review and assess the decentralization of FDI management in such fields as land, technology, environment, labor, export and import, in order to propose solutions to address lapses.

- To intensify the inspection, examination and supervision of FDI projects with investment certificates already granted or adjusted. To resolutely suspend projects with investment certificates granted or adjusted, which fail to conform to planning, process, procedures....

- To prescribe strong measures and strictly handle violations (such as failure to fully comply with the reporting and statistical regimes, failure to ensure the environment; failure to use land and resources for proper purposes and in accordance with the procedures; failure to strictly implement the labor law, etc.), including enterprises and competent agencies.

3. To complete criteria for grant of investment certificates

For large-scale projects with great socio-economic impacts, the investment certificate- granting agencies should attach importance to the examination and assessment of investors’ capital-raising capability, impose penalties or demand deposits to ensure their deployment of projects as scheduled. For mineral-exploiting FDI projects, the selection of investors must ensure mining combined with post-mining processing, creation of high added value through the use of modern technologies and equipment and appropriate environment treatment systems in order to efficiently use natural resources. For areas and regions directly related to security and national defense, appropriate foreign investors should be selected to ensure harmony between economic interests and security and national defense. Ministries and sectors should specify and clarify the criteria and conditions for investment in the sectors under their charge, which serve as the basis for licensing and post-licensing management (investment ratio, technical, technological and environmental standards and requirements,...).

4. To renew investment promotion activities

- Investment promotion activities should be associated with the national socio-economic development objectives and tasks; investment promotion activities nationwide require the general and unified coordination of the central government regarding content, time and venue. They must be carried out according to FDI attraction plans and orientations with a view to enhancing their efficiency.

- Annually and periodically, based on the socio-economic development demands of the country and the peculiarities and advantages of each region and each locality and the trend of FDI capital flows, the Ministry of Planning and Investment shall summarize opinions of ministries and sectors and promulgate criteria guiding ministries, sectors and localities in drawing up investment promotion plans. Based on the criteria promulgated by the Ministry of Planning and Investment, ministries, sectors and localities shall draw up annual investment promotion plans and send them to the Ministry of Planning and Investment for summarization, agreement and general coordination (regarding content, time, venue,...) and coordination guidance, thereby redress overlap and inefficiency.

- To intensify investment promotion with regard to big and transnational groups, while attaching importance to investment promotion with regard to medium- and small- sized enterprises, especially in supporting industries.

- To regularly update and study the trend of FDI capital flows and potential partners for taking the initiative in approaching them and introducing investment projects. To study appropriate policies and methods to approach, mobilize and attract investment from  transnational groups into large-scale projects with spill-over effects and positive impacts on socio-economic development.

- For countries and territories with potential to invest in Vietnam, staffs should be increased, funds adequately supplied and working conditions be created for investment promotion representatives in these countries and territories so as to raise their operational efficiency.

- When carrying out investment promotion overseas, in necessary cases (such as in areas with many foreign investors showing their concern, important partners, large-scale investment promotion or investment promotion activities joined by many localities at the same time and in the same venue,...), the Ministry of Planning and Investment will organize delegations or participate in these activities for support and presentation of general policies, while ministries, sectors and localities will present their respective advantages, peculiarities, potentials and support.

- To attach importance to on-spot investment promotion, thereby to further support licensed projects for their convenient and efficient operations; to intensify talks with investors for prompt settlement of reasonable requests of FDI enterprises, aiming to remove difficulties and problems. To consider on-spot investment promotion an important channel and through investors who have succeeded in Vietnam to present investment experiences and introduce the investment environment in Vietnam.

5. To enhance the inspection and supervision of investment activities

- To quarterly review and classify FDI projects for proper handling of difficulty-hit projects.

- The investment-licensing agencies shall intensify the inspection and supervision of FDI projects in localities for timely detection of difficulties and problems met by enterprises so as to find solutions to support them and remove difficulties; urge projects being slow or late in implementation or failing to comply with commitments; and at the same time, handle cases of law violations.

- To intensify the inspection and supervision of the process of licensing and managing FDI projects by the investment certificate-granting agencies in order to reorganize the licensing and post-licensing management, focusing the observance of the process and legal provisions in the course of dossier receipt, verification and licensing; the provision of incentives for projects; the performance of the responsibility for post-licensing inspection and supervision,...

- The Ministry of Planning and Investment and line ministries shall join the investment certificate-granting agencies in intensifying the coordination, review and inspection, if necessary, of FDI projects, paying special attention to large-scale projects; projects occupying large land areas; projects with environmental pollution risks; energy-consuming projects and other sensitive projects. Upon detection of violations in the course of inspection and supervision, it can propose the investment certificate-granting agencies to withdraw the investment certificates of late-deployed projects or those breaching legal provisions, or propose the Prime Minister to cancel the investment certificate-granting decisions of the investment certificate-granting agencies.

- To establish a national system on FDI information to facilitate the continuous and strict supervision; to regularly update and classify the FDI attraction and FDI activities to serve the management and policymaking by state agencies at different levels.

- To scrutinize and reorganize the settlement of disputes related to FDI.

III. ORGANIZATION OF IMPLEMENTATION

1. Ministries, sectors and localities shall perform their assigned tasks defined in the Appendix to this Resolution; expeditiously submit to competent authorities for promulgation or revision relevant legal documents for the implementation of the Resolution.

2. Ministries and sectors shall regularly review and publicize the conditional investment sectors and guide the application with regard to the sectors under their state management; coordinate with the Ministry of Planning and Investment and related ministries and sectors in making a list of projects calling for FDI capital in different sectors, including supporting industry; assess the decentralization of management of investment activities in the fields under their specialized management and propose solutions to redress problems; update and summarize data, analyzing and assessing the investment situation, assisting the state management of FDI according to sectors; intensify the review, inspection and supervision of implementation of laws related to the sectors under their management with a view to removing difficulties for FDI projects and proposing in time policy adjustments.

3. Ministries, sectors and provincial-level People’s Committees shall inspect and supervise the performance of tasks by every agency, organization and person; apply the mechanism of timely commendation and severe discipline in the performance of assigned tasks; closely follow and proactively monitor and assess the practical situation in order to take flexible and timely handling measures or propose solutions to competent authorities for timely and effective direction.

4. The Ministry of Planning and Investment shall assume prime responsibility for, urge and coordinate with related ministries and agencies in, reviewing, inspecting and overseeing the implementation of the Resolution; review and report to the Prime Minister on the situation and results of implementation of the contents of this Resolution; when necessary, can propose amendment and supplements to the Resolution and assign the implementation in conformity with the practical situation.-

On behalf of the Government
Prime Minister
NGUYEN TAN DUNG