Although Vietnam’s economy is only dramatically changes after Doi Moi but the legal frame for foreign investment has been built for long time ago. The 1st important milestone is Decree No. 115/CP dated 18/04/1977 promulgating Rules on foreign investment.
In this first legal document about foreign investment, Vietnam has shown principle on investment protection that foreign investors can freely business in any business lines (except some lines banned by the Government). Although this Rule only allows foreign investors invest in Vietnam, it does not contain any encouraging investment policy. The investment duration is limited at 10-15 years; the investment is limited in form of co-operation; venture or establish a 100% FDI enterprise for producing export goods. Beside of that, the CIT rates applicable to investor are 30-50% which is very high.
Law on foreign investment 1987 is a breakthrough in investment attraction of Vietnam with commitments on investment incentives like protecting ownership of investors, increasing investment duration up to 50 years, incentive CIT rate at 10%; in special cases, they can enjoy tax exemption for 04 years and 50% reduction CIT for the next 04 years... In procedure aspect, the law has detailed procedure for investment that limit time for settle an investment document is no later than 03 months.
Later, Law on foreign investment 1996, Law on investment 2005 continuously improve incentives like CIT; land use rental; technology transfer; import vehicle, material for investment project. The investment procedure is reduce to 60 days in Law 1996 and turned in to 15 days in Law 2005.
Recently, Law on investment 2014 shows policy changes, does not focus on tax incentives but go for innovating administration. It regulates competent, order, procedure that equivalent to each type, size of investment projects. It also regulate list of conditional business lines to implement the principle on business freedom.
For 30 years from 1987, laws on foreign investment of Vietnam has been more and more completed and brought many huge investment waves. But world’s economy is constantly changing, can Vietnam keep its advantages in investment attraction in the 4.0 evolution?
Lê Thắng
