The Law on Enterprise 2020 (LOE) and the Law on Investment 2020 (LOI) will come into effect in early 2021. Enterprises and investors expect the implementation of these two laws to simplify procedures, facilitate market expansion, reform the business environment, and promote investment attraction.

The LOE and LOI will promote the quantity and quality of
enterprises as well as investors Photo: H. Diu 

Add a foundation to "fight"

The LOE 2020 and the LOI 2020 were passed by the 14th National Assembly at the 9th session and will take effect from January 1, 2021. Experts say these two laws have many positive changes compared to the old ones, promoting both the quality and quantity of enterprises.

Some of the positive changes in the LOE 2020 include consistency with the process of cutting administrative procedures and creating more favorable conditions for enterprise registration and market entry. Enterprises are allowed to decide on their seals; the number, form and content of the seal of their enterprise, branches, representative offices and other units. This new LOE also removes the regulation in which a shareholder or group of shareholders must own common shares for at least six consecutive months to ensure that the exercise of shareholders' rights does not affect the enterprise’s normal operation.

A representative of BigPhone Investment and Trade Co., Ltd. said that over the years, the laws and institutions on Vietnam's business environment have seen many changes, but some regulations have not closely followed enterprises’ operations. For instance, it is not easy for a new business to meet many regulatory requirements because going from a business idea to reality is very difficult. Therefore, simplicity and creating favorable conditions for starting a business is very important, helping businesses confidently enter the market, as well as adding a foundation to "fight" market changes.

Concerning the LOI 2020, it will cut 22 conditional business sectors, industries or trades; realize common commitments and regulations on market access restrictions upon Vietnam's accession to WTO as well as the participation in free trade agreements and new generation investment protection agreements; and supplement and complete regulations regarding investment incentives.

According to Lawyer Le Dinh Vinh, Director of Vietthink Law Firm cum VIAC (Vietnam International Arbitration Centre), this new LOI has been amended with many new points to improve the quality and efficiency of attracting domestic and foreign investment resources.

For example, it adds regulations on the form and subjects entitled to investment incentives according to the regulations on corporate income tax or the law on import tax and export tax. Simultaneously, there is an additional form of investment incentives that is fast depreciation, increasing deductible expenses when calculating taxable income.

The LOI 2020 also clearly stipulates, narrows and clarifies the scope of beneficiaries of incentives. Since then, investment incentive policies are more effective when appropriate and worthy beneficiaries are identified.

Experts said that Vietnam has about 750,000 businesses in operation. Attracting domestic and foreign investment has achieved many encouraging results. In the 2016-2018 period, the number of registered projects and disbursed investment capital increased rapidly. Particularly in 2018, the disbursement capital reached nearly US$20 billion. The LOI has contributed significantly to these successes. Therefore, businesses expected that these two new laws would create a breakthrough for businesses in particular and the macro economy in general.

According to Nguyen Kim Dung, Legal Director of British University Vietnam, the most significant amendment in the LOI 2020 is that the foreign investment sector in higher education has been included in the list of investment incentives. This helps businesses get preferential tax and income tax as well as preferential policies on land in the future. Additionally, there is a big change that the LOI 2014 stipulated that foreign investment projects must apply for approval from the Prime Minister, but in the revised new law, these projects only need to apply for a license from the Ministry of Planning and Investment. This is a great step forward in cutting administrative procedures, reducing the size and authority of licensing, helping businesses quickly apply for a license.

Understand and get it right

To take advantage of these two new laws, Hoang Quang Phong, Vice President of Vietnam Chamber of Commerce and Industry (VCCI), said that businesses need to understand the LOE 2020 and the LOI 2020 clearly. This facilitates market expansion, building a better business environment, helping businesses and investors set up joint ventures and cooperation smoothly.

Lawyer Le Dinh Vinh assessed that the amendments and supplements to the laws have not met expectations. Thus, the process of guiding and implementing a number of new regulations will have problems in practice. Therefore, it is necessary to review to continuously amend, supplement and complete relevant laws to synchronize with the new provisions of the LOE 2020 and the LOI 2020.

Sharing the same point of view, Nguyen Kim Dung said that investment activities in higher education are included in the list of investment incentives, but to facilitate and attract investment in this field, relevant laws also need to be revised. For example, when building foreign universities in Vietnam, enterprises will have to invite foreign experts and professors to teach in the short and long term. Currently, foreign workers have to apply for a work permit, so Dung suggested that it is not necessary to grant a permit to foreign workers for a certain period of time to improve investment attraction as well as facilitate businesses.

In addition, businesses agreed that, without a decree, law is on paper only. However, businesses still hope for "miracles" that these two laws will bring as in the previous ones.