Resolution No. 103/NQ-CP of August 29, 2013, on orientations to increase efficiency of attracting, using and managing foreign direct investments in future

• Official number: 103/NQ-CP
• Legislation Type: Resolution
• Organization: The Government
• Signer: Nguyen Tan Dung
• Issued Date: 29/08/2013

THE GOVERNMENT -------	SOCIALIST REPUBLIC OF VIETNAM Independence– Freedom – Happiness ---------------
No. 103/NQ-CP	Hanoi, August 29, 2013

RESOLUTION

ON ORIENTATIONS TO INCREASE EFFICIENCY OF ATTRACTING, USING AND MANAGING FOREIGN DIRECT INVESTMENTS IN FUTURE

In past time, foreign direct investment (FDI) has contributed positively in achievements of growth and development of Vietnam. Counting to June 2013, there are 15,067 projects in effect, total registered capital is about USD 218.8 billion, and the executing capital is about USD 106.3 billion. FDI has become an important additional source for total investment capital of society (accounted for 23.3% of total investment capital of society in 2012), contributed in increasing the production capability of some industries, renewing technologies, raising qualifications on economy management and enterprise administration, increasing the export turnover (accounted for 64% of total export turnover in 2012), and changed structure of export commodities, improve the international payment balance, contributed for budget (about USD 3.7 billion in 2012), developed high-quality human resource, created jobs (more 2 million direct workers, from 3-4 million indirect workers)… Concurrently, FDI also has impact to other areas of the economy; arouse the domestic investment resources, restructure economy, reform state enterprises, renovate administrative procedures, improve market economy institutions, promote international economy integration. Through cooperation in foreign investment, Vietnam has increased the political and external relations, development of friendship relations with many countries, territories, and partners on the world.

However, attraction of foreign investment in past time has not yet attained some targets of attracting high technologies, source technologies, support technologies, investment in infrastructure development and technology transfer. Quality of FDI projects generally is not high, the added value is low, investment essentially at the medium and small scale, participation in investment based on production chain of transnational corporations is still limited; some FDI enterprises use obsolete technologies, cause environment pollution; some FDI enterprises have manifestation of using method of price transfer to tax avoidance, cause losses of budget; fail to ensure legitimate rights and benefits of laborers…

The essential reasons lead to the limitations stated above are the system of law and policies which have many provisions not synchronized, overlapped and inconsistent; because Vietnam has not yet been proactive and not well prepared necessary conditions for ensuring FDI operated effectively such as conditions of conformable infrastructure, human resource, system of domestic enterprises, planning, and technical barriers…

The appraisal, grant of investment certificate in some cases lack close control, fail to observe fully the planning and the supplement capability of technical infrastructure system, social infrastructure… Inspection, examination, and supervision of carrying out FDI projects are not regular, not effective really. Methods of investment promotion (IP) are renovated lately, activities of investment promotion from central to local levels have not yet had unified, close coordination and been ineffective. Form of investment promotion on spot through support for projects which have been granted investment certificate to be carried out conveniently has not yet been attached special importance to properly. The investment environment of Vietnam showed some limitations, which make the competition of investment environment in Vietnam reduced in comparison with countries in region.

Before the above situation, to be suitable with new situation, aiming to increase the competition of the investment environment in Vietnam, the Government requests Ministries, sectors, central agencies and the provincial People’s Committees for grasping thoroughly viewpoints, orientations and concentrating in direction, controlling, organizing implementation of the following essential solutions:

I. VIEWPOINTS, ORIENTATIONS TO FOREIGN INVESTMENT IN FUTURE

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- Economy with FDI capital is a part of Vietnam’s economy, the State encourages for its long-term development, ensures legitimate rights and benefits, the equal treatment on the basis of mutually beneficial cooperation, and complies with international commitments in which Vietnam acceded.

- FDI is an important resource of economy, together with the domestic resource to create the summing power to perform objectives of industrialization, modernization of country and restructuring the economy.

- FDI attraction must ensure the conformity with planning and the concentrated and unified directions of central level matching with reasonable decentralization to localities on the basis of socio-economic conditions and capability, quality of officer contingent…; attach special importance to effectiveness of state management in inspection, supervision, and ensuring strictness of law.

- Amendment, adjustment of policies, law on foreign investment must ensure principle of unceasingly raise the competition capability, to be more and more convenient and preferential.

2. Orientations:

a) To create strong changes of FDI attraction in selective direction of projects with high quality and added value, using modern technologies friendly with environment, especially in information technology and biological technology serving agriculture; development of infrastructure, training human resource at high quality, research and development, modern services…

b) To strengthen attraction of projects with large scale, products with high competition, participation in the global value chain of transnational corporations, hence build and develop system of auxiliary sectors and enterprises; encourage industrial projects to change gradually from processing to production; select the big and prestigious investors to develop the financial market; concurrently, attach special importance to projects with medium and small scales in conformity with each industry, locality.

c) Encourage, facilitate and strengthen the linkage between FDI enterprises with together and domestic enterprises.

d) To plan FDI attraction under sectors, fields, partners conforming to advantage of each region, each sector, so as to promote the investment efficiency of each locality, each zone conforming to the master plan, ensure the national overall benefit and restructure of economy according to new model growth.

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1. To improve the law and policy system involving investment in consistent, publicized and transparent direction, having forecast ability, facilitating for investor and having competition in comparison with countries in region.

a) To continue improving the legal framework of investment:

- To research, amend the Law on investment in conformity with requirement of socio-economic development and the international integration background in new stage in principle where the law on investment is legal ground to adjust uniformly the process and procedures for investment and state management work of investment. Specialized provisions only adjust contents relating to operational conditions when perform investment projects and specialized state management.

- To research and amend the Law on enterprises in direction of further creating an advantageous, transparent legal framework for establishment, operation and termination of enterprises of all economic sectors.

- To review overall the current law system, firstly laws involving investment and trading (such as Land Law, Law on Construction, Law on environmental protection, Law on high technology, Law on technology transfer, Law on Education, Law on business in real estate, Law on Housing, …) in direction which ensure the uniformity, synchronism with provisions of Law on investment, research, propose application of form of promulgating one law to amend many law, promulgating one Decree to amend many related Decrees with the aim to immediately handle inadequacies, overlaps.

- To define more clearly characteristics of investment procedures and conditions for foreign investors in order to facilitate more for investors through the transparency of procedures; and ensure efficiency of state management on investment.

- To review the current legal regulations on activities of purchase and sale and merger involving foreign elements at present which are being regulated in many legal documents so as to synchronize and define more specifically and clearly.

- To announce the conditional investment fields, specify content of conditions; guide implementation and application of Vietnam’s commitments as acceding WTO for some service trades.

- To guide provisions on re-registration of enterprises with foreign investment capital in direction facilitating for investment and business activities.

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- To amend investment incentive policies to ensure the systematic characteristic from tax preference (Law on enterprise income tax, Law on export tax and import tax), financial preferences to non-financial preferences; unify between tax policy and investment policy aiming to contribute in increasing the competition with other countries in region regarding FDI attraction; to adjust objects enjoyed tax preferences according to direction of attaching the preferences based on the prioritized sectors and fields with preferences based on various territories in order to promote division of labor between localities; to perform the selective investment preference conforming to new orientation for FDI attraction; research, supplement preferences for investment projects in industrial parks.

- To review and remove limitations not necessary and allow more participation in capital market, financial market in efficient and strict principle.

- Apart from grounds to consider priority based on fields and geographical areas, it should research to supplement criteria to consider priority in investment such as: Projects under field of auxiliary industry, projects with high added value, projects using many domestic raw material and supplies, and projects which commit in transfer of advanced technologies, …

c) To amend, supplement policy mechanism with the aim to encourage foreign and domestic individual investors to invest in infrastructure field:

- To consider, amend, supplement the Decision 71/2010/QD-TTg, dated November 09, 2010, on regulation of pilot investment in the public-private partnership form (PPP) and revise the Government’s Decree No. 108/2009/ND-CP, dated November 27, 2009, on investment in the form of build-operate-transfer (BOT), build-transfer-operate (BTO) or build-transfer (BT) contracts in direction of assembling, unifying in a Decree with a content being transparent, clear, easy for application and conformable with international common practices.

- Expeditiously overcome inadequacies at present in charges of using infrastructure in direction which ensure recoverability of investment capital, increase commitment of foreign currency converter, strengthen measures to support for ground clearance and facilitate to the utmost for investors.

d) To improve mechanism, policy in FDI attraction for the supporting industries:

In near future, to perform immediately elaboration and promulgation of new legal documents replacing the Decision No. 12/2011/QD-TTg dated February 24, 2011, on development policy of a number of supporting industries in directions:

- To specify, detail the industries and products belonging to the supporting industries in direction of focusing in key sectors and products.

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- To research to increase the preferential level to attract investment projects in the supporting industries according to list of fields and supporting industrial products promulgated by the Government, as well as projects using many source supplying supplies and raw materials,… from the domestic market.

Concurrently, research to elaborate Law on encouragement and development for the supporting industries.

dd) To improve mechanism, incentive policy to attract projects with high technology and conformity in Vietnam, and ensure control of import technology:

- Expeditiously review, revise the existing legal documents (Law on Science and Technology, Law on Technology transfer) to encourage and attract foreign investors in for investment in modern and high technology projects, in conformity with conditions of Vietnam.

- To improve the legal documents aiming to encourage and facilitate for technology transfer; and increase the state management efficiency for this activity, prevent the situation of transfer pricing through contracts of technical transfer.

- To strengthen execution and protection for intellectual property. Expeditiously carry out solutions to increase capability, effectiveness of system protecting and executing intellectual property nationwide.

- To research, amend, supplement provisions on criteria of hi-tech enterprises in direction of adjusting and specifying criteria of high technology in conformity with actual conditions of Vietnam, counted the group of projects with large scale and large annual revenue, using many high-quality laborers…

- To research, amend and supplement provision on importing machinery, equipment, including the used machinery and equipment in direction of strengthening application of evaluation and re-evaluation instruments; have provisions on import standard, sanction which is enough strong to remove the obsolete machinery and equipment spending much energy, with implicit environment pollution, and affecting to human healthy…

- To strengthen state management on control of machinery, equipment and technologies imported in Vietnam. Periodically organize assessment on technology level of sectors, fields to define fields prioritized in FDI attraction.

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- To review to amend and improve system of national technical regulations on energy consumption, environment, and environment impact assessment for investment sectors and fields causing greenhouse effect and environment pollution.

- To promulgate regulations on preventing and minimizing pollution, and controlling environment, providing for limitations of emission, enterprises must announce publicly environmental information and solutions to handle emission volume.

- To improve mechanism, policy on environment management. To push up guiding, monitoring, examining enterprises in compliance with law on environmental protection.

- To improve regulations on sanctions of law violations in environment field to be enough deterrence. To research to supplement sanction based on the actual emission levels which replaces sanction based on the maximum and minimum framework as now.

- To elaborate mechanism, policy to attract investment in treating emission gas, sewage, solid waste and urban environment sanitation…

g) To improve regulation in order to increase effectiveness and efficiency of foreign exchange and credit management:

- To elaborate the mechanism of supervising total domestic loans and foreign loans of enterprises owning FDI capital in correlation with total investment capital of project.

- To improve legal grounds relating to supervision over capital flow in money of projects owning FDI capital (including contribution capital in money, and capital flow from foreign and domestic loans).

h) To improve regulations aiming to strengthen labor management in FDI projects:

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- To encourage FDI enterprises to train careers for laborers at enterprises.

- To stipulate in direction facilitating more for licensing to foreign laborers working in Vietnam in fields asking high professional skills, qualifications of technology which the domestic laborers have not yet satisfied; concurrently, have mechanism to encourage enterprises in training domestic laborers to replace these profession positions.

- To increase the effectiveness of state management for laborers working in FDI projects, strengthen examination, supervision over compliance with regulations applicable to foreign laborers; resolutely handle in strict manner and properly with law in respect to foreigners working illegally in Vietnam.

i) To improve regulations on land, housing:

- To research, draft documents guiding implementation of the Land Law (amending) in direction of narrowing distinction between foreign investors and domestic investors in accessing to land; providing for state to proactive in land recovery according to master plans, plans on land use already announced, organizing compensation and support for resettlement to create clean land fund to proactively regulate the land market, as well as serving as basis for proactively attracting investment, facilitating for the land fund access of investor; further reform administrative procedures, set up the transparent and public mechanism in land management and use.

- To step up land auction and bidding; to review and classify all projects using land; resolutely recover areas of land, water surface assigned to enterprises, including enterprises with FDI capital but not be used or used ineffectively for auction, bidding or assigning to potential investors to carry out investment, using more effectively.

- To research, amend and supplement some provisions in Law on business in real estate in direction of increasing the rate of equity capital of investors; to expand scope of business in real estate for foreign investors; to supplement provisions on form of contributing capital by right to develop the project,…

- To research, supplement mechanism, policy for management, elaborate the sanctions for handling with the aim to prevent and limit situation of transfer pricing of projects in real estate business through hiring services of management, sub-contractors…

- To review implementation of the Law No.34/2009/QH12, on owning houses of the Vietnamese residing abroad and Resolution 19/2008/QH12 of National Assembly, on pilot permission for foreign organizations and individuals to own the condominium apartment in Vietnam, so as to consider extension of objects being foreigners permitted to own the real estate, loosening conditions and simplifying the process and procedures for purchase and owning apartment buildings or houses of foreign organizations and individuals in Vietnam; to permit foreign investors who invest in projects in Vietnam to be entitled to purchase apartment buildings or houses in Vietnam in conformity with duration of project in Vietnam.

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k) Ministries and sectors make assessments being more specific about impacts of the matter which by 2015, Vietnam will fulfill commitments of opening market in framework of the ASEAN Free Trade Agreement (AFTA), in order to realize sectors, fields, products which will have advantages or sectors, fields, products which will have difficulties in future, hence have specific responses.

2. To adjust some principles in investment management and decentralization

- Agencies granting certificate of investment shall control strictly the compliance in accordance with planning for projects when granting certificate of investment.

- Expeditiously elaborate the coordinating mechanism in FDI state management aiming to strengthen coordination between the Ministry of Planning and Investment and Ministries, sectors and the provincial People's Committees.

- To further improve mechanism, decentralization of granting certificate of investment with the aim to promote the dynamic, creativeness and responsibility of localities, and ensure the unified management of central level, specified as follows:

+ To supplement process of appraisal for projects under the Prime Minister’s competence to decide guideline of investment, in which include projects with large scale, pervaded ability, strong effect to social-economic development of whole region and country, projects using a large land areas.

+ Regarding process of appraisal: Agencies issuing certificate of investment shall preside over verification in accordance with current regulation, submit report of verification and relevant dossiers to the Prime Minister, concurrently, send them to the Ministry of Planning and Investment for independent verification. On the basis of dossiers and report on verification of agencies issuing certificate of investment, the Ministry of Planning and Investment shall appraise independently the investment projects, or for complicated projects involving many sectors, fields, localities, depend on specific extent, the Ministry of Planning and Investment may consult agencies issuing certificate of investment, and Ministries, sectors, and relevant localities, experts and scientists, … The appraisal content shall focus on the following principle contents: The compliance on process, procedures for verification and relevant laws; influence, impact of projects with respect to the national, regional, sectoral socio-economic development; feasibility of resources for projects (labor, infrastructure, electricity, raw materials,…); ability to raise capital… The Ministry of Planning and Investment shall submit the independent appraisal report to the Prime Minister. Agencies issuing certificate of investment shall issue certificate of investment for project after the Prime Minister has approved for the investment guidelines.

- To sum up, assess implementation of decentralization in managing FDI activities in fields such as land, technology, environment, labor, export and import ... so as to propose solutions to overcome inadequacies.

- To strengthen inspection, examination, and supervision for projects with FDI capital already been licensed or adjusted certificate of investment. Resolutely suspend projects which have been licensed or adjusted certificate of investment but not conform to planning, process, procedures …

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3. To improve criteria of issuing certificate of investment

For projects with large scale, strong impact to economy, society, agencies issuing certificate of investment should attach special importance to consider, assess capability to raise capital of investors, have sanctions, or require for making deposits to ensure implementation of obligation on carrying out project in accordance with its progress. For FDI projects of exploiting minerals, the selection of investors must base on combination of exploitation with intensive processing, creating high added value by using technologies, modern equipment and system of environment treatment in conformity with effective use of natural resources. For some geographical areas, zones directly related to security, national defense, agencies should select appropriate foreign investors to ensure harmony of economic benefits and security and national defense… Ministries and sectors should prescribe in details, clearly criteria, conditions for investment in their fields as the basis for license and management after license (investment package, standard and technical, technological and environmental requirements,…).

4. Renewal of investment promotion

- Activities of investment promotion should associate with objectives, tasks of national economic-social development; have general and unified regulation of central level for activities of investment promotion in nationwide about content, duration, location, be conducted under plans and orientations of FDI attraction aiming to strengthen effectively activities of investment promotion.

- Annually and each period, on the basis of demand on national economic-social development and characteristics, advantages of each region, locality, as well as tendency of FDI capital flow, the Ministry of Planning and Investment shall sum up opinions of Ministries and sectors, to promulgate criteria guiding Ministries, sectors and localities in elaborating plans on investment promotion. Ministries, sectors and localities, on the basis of criteria promulgated by the Ministry of Planning and Investment, elaborate annual plans on investment promotion and send them to the Ministry of Planning and Investment for summing up, unifying, and regulating generally (about content, duration, location, …) and guiding coordination; overcome situation of overlapping, ineffectiveness.

- To strengthen investment promotion for big and multi-country corporations; concurrently attach special importance to investment promotion for small and medium-sized enterprises, especially in the supporting industries.

- Regularly update, research tendency of FDI capital and potential partners to proactively have access, and promote introduction of investment projects. To research appropriate policy and methods to have access, mobilize, and attract investment of transnational corporations in projects with large scale, pervaded ability, positive effect to economic-social development.

- For potential countries, territories to invest in Vietnam, it should to increase payroll, allocate full funding, conditions for working with the aim to raise the operational efficiency of overseas representatives for investment promotion.

- When conduct investment promotion abroad, in necessary cases (such as: Geographical areas of investment promotion which have many foreign investors in interest, have many important partners, large scale of investment promotion or many localities conducting investment promotion abroad at the same time and in the same location,…) the Ministry of Planning and Investment shall organize Delegation or participate to support and present about general policy, and other Ministries, sectors, localities shall present about advantages, characteristics, potentials, and their supports.

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5. To strengthen examination and supervision over investment

- Quarterly, FDI projects must be considered and classified to have appropriate direction for handling projects with difficulties.

- Agencies licensing investment must strengthen examination and supervision over FDI projects in their localities to timely detect difficulties, problems of enterprises in order to find solutions to support and remove difficulties; urge the projects being late in comparison with progress, late in implementation or failing to observe commitments; concurrently, handle cases of law violations.

- To strengthen examination, supervision over process of license and management for FDI projects of agencies issuing certificate of investment so as to correct work of license and manage after license, focus on contents: The compliance of processes, provisions of law in the course of receiving dossier, verification and licensing; prescribing on preferences for projects; implementation of examination and supervision after license,…

- The Ministry of Planning and Investment, and Ministries of specialized management together with agencies issuing certificate of investment shall strengthen coordination, reviewing, in necessary case, conduct examination for FDI projects, attach special importance to projects under groups: with large scale; using large land area; projects with risk of environmental pollution; projects causing energy loss; other sensitive projects,… In the course of examination and supervision, when detect mistakes, depend on seriousness, they may propose agencies issuing certificate of investment for revocation of certificate of investment for projects being late for carrying out, projects violating provisions of law, … or propose the Prime Minister for annulling Decision on issuing certificate of investment of agencies issuing certificate of investment.

- To elaborate the national FDI information system to assist for continuous and strict supervision; regular update and classify situation of attraction and operation of FDI serving for management, administration and planning of policy of state agencies at all levels.

- To review, correct the work of solving disputes involving FDI.

III. ORGANIZATION OF IMPLEMENTATION

1. Ministries, sectors and localities shall implement tasks assigned in Annex enclosed to this Resolution; expeditiously submit to competent authorities for promulgation, or amendment, supplementation of relevant legal documents to implement the Resolution in accordance with regulation.

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3. Ministries, sectors and the provincial People’s Committees shall examine, supervise during implementing tasks of each agency, organization and individual; perform timely and strict mechanism of commendation and discipline in implementing the assigned tasks. To follow up actual situation, proactively monitor, assess to have measures to handle timely and flexibly, propose to competent authorities solutions in timely and effective direction and administration.

4. The Ministry of Planning and Investment shall preside over, urge and coordinate with relevant Ministries and agencies in reviewing, examining, supervising implementation of the Resolution; sum up, and report the Prime Minister about situation, result of implementation of contents stated in this Resolution. In necessary case, they may propose for amendment, supplementation to contents of Resolution and assignment of implementation in conformity with the actual situation.

ON BEHALF OF THE GOVERNMENT
THE PRIME MINISTER




Nguyen Tan Dung

ANNEX

ASSIGNMENT OF TASKS TO IMPLEMENT THE GOVERNMENT’S RESOLUTION NO.103/NQ-CP ON ORIENTATIONS TO INCREASE EFFECTIVE ATTRACTION, USE AND MANAGEMENT OF FOREIGN DIRECT INVESTMENT IN FUTURE                                                                   (Promulgated together with the Government’s Resolution No. 103/NQ-CP dated August 29, 2013)