According to the Vietnam Chamber of Commerce and Industry (VCCI), under Article 22 of the Investment Law 2020, foreign investors can establish economic organizations to carry out investment projects. However, before establishing an economic organization, foreign investors must have an investment project, complete the procedures for obtaining or adjusting the Investment Registration Certificate, except in cases involving the establishment of small and medium-sized innovative startups and venture capital funds according to regulations on support for small and medium-sized enterprises.

According to the Investment Law 2020, before establishing an economic organization, a foreign investor must have an investment project and complete the procedures to obtain or adjust the Investment Registration Certificate (Photo: KL)

From the date of issuance of the Business Registration Certificate, the economic organization established by a foreign investor is recognized as the investor executing the investment project according to the Investment Registration Certificate.

However, the Investment Law 2020 does not specify that after establishing the economic organization, the foreign investor must undertake procedures to adjust the Investment Registration Certificate to reflect that the investor on the certificate is "an economic organization established by the foreign investor." This creates difficulties for foreign investors during implementation.

In practice, a foreign investor, as an individual, registers an investment project and is issued an Investment Registration Certificate. The certificate names the investor as an individual. After receiving the Investment Registration Certificate, the investor then establishes a company to execute the investment project. According to Article 22 of the Investment Law 2020, the company established by the investor will be the entity executing the investment project.

After some time, this company may wish to expand the project, undertake additional activities, and adjust the Investment Registration Certificate to include these new activities.

However, according to VCCI, the activities the company wants to adjust are services for which Vietnam reserves the requirement that foreign investors must be legal entities, not individuals. Meanwhile, the Investment Registration Certificate currently records the investor as an "individual," not a company, leading the Department of Planning and Investment to refuse the company’s request to undertake these additional activities.

VCCI questions whether, in cases of adjusting investment activities as mentioned above, the investor should be considered the "individual investor" (as listed on the Investment Registration Certificate) or the "company established by this individual investor" according to Article 22 of the Investment Law. In practice, the discrepancy between the investor listed on the Investment Registration Certificate and the actual investor executing the project is the cause of the issues mentioned above.

Currently, according to the Investment Law 2020, before establishing an economic organization, a foreign investor must have an investment project and complete the procedures for obtaining or adjusting the Investment Registration Certificate, except for the establishment of small and medium-sized innovative startups and venture capital funds. The requirement to have an investment project before establishing a company creates a situation where it is challenging to accurately identify the investor executing the investment project.

In response to the draft amendment to the Planning Law, Investment Law, Public-Private Partnership Investment Law, and Bidding Law being prepared by the Ministry of Planning and Investment, VCCI suggests that to address this issue, the drafting committee should consider amending the regulations so that a foreign investor can establish an economic organization first and then proceed with obtaining the Investment Registration Certificate when undertaking the investment project.