In this article, our Managing Partner Nguyen Van Phuc and Lawyer Nguyen Nhat Duong will address the difficulties and troubles for investors and enterprises in the implementation of the administrative procedure. The article was published in The Saigon Times No. 03-2024, dated on January 18, 2024. Below is the English version:
Nearly four decades after officially opening its economy, Vietnam has made significant progress in attracting domestic and foreign investment and business. In this process, Vietnam has entered into numerous international treaties and free trade agreements with a commitment to create market access conditions for foreign investors and build a healthy and favorable business environment for enterprises. In order to achieve this goal, the State has been committed to reforming investment and business administrative procedures in both theory and practice. If the administrative procedures are reformed, investors and enterprises will reduce the time and cost of carrying out administrative procedures in the investment and business process.
However, this reform so far seems to be not comprehensive and uneven among localities nationwide, causing more or less difficulties and troubles for investors and enterprises. In some cases, investors have even decided to stop their investments simply because of problems in carrying out administrative procedures.
Each locality has a different dossier submission method
Previously, the submission of investment dossiers was often done through the National Investment Information Portal. After submitting information online, investors/enterprises can, depending on their preferences, submit dossiers directly to the Department of Planning and Investment where the investment project will be implemented, or submit documents online with electronic signatures. In particular, in some localities, investors/enterprises can upload scanned documents or images online and then send paper documents to the Department of Planning and Investment for verification of the accuracy of the dossiers.
Since the launch of the National Public Service Portal, according to the Prime Minister's Directive No. 27/CT-TTg dated October 27, 2023 on the continuous promotion of solutions to reform and improve the effective resolution of administrative procedures and provide public services to people and enterprises, 100% of administrative dossiers must be received and processed through the Administrative Procedure Information System, connected and synchronized with the National Public Service Portal. In practice, in some localities, the implementation of investment procedures is currently not carried out through the National Investment Information Portal, but through the public service system of the relevant province or city (linked to the National Public Service Portal).
This requires investors/enterprises to specifically find out the method of submitting investment dossiers in the province/city where the investment project is expected to be implemented in order to submit the appropriate documents. At the same time, the licensing authorities (Department of Planning and Investment or Management Board of Economic Zones, Industrial Parks, etc.) in each locality have different requirements as to whether investors/enterprises must submit paper documents or not, which can easily lead to confusion and mistakes for investors/enterprises if they do not carefully study the requirements.
Furthermore, in some places, when registering to submit documents, investors/enterprises have chosen to receive the results at home by mail. However, when the process is completed, the results are not automatically delivered to the investors/enterprises based on the registered information. Instead, investors/enterprises must still contact the dossier processing department to request assistance in receiving the results by mail (in many cases, investors/enterprises must fulfill additional requirements from the dossier receiving and results delivery departments, such as sending an e-mail with an attached request to receive results by mail). In some cases, the result delivery process takes several days and depends on the dossier receiving and result delivering department of the authorities.
This situation occurs for both investment and business dossiers in some provinces and cities. At present, in Ho Chi Minh City, for business registration procedures, the delivery of results by post is completely automatic. Investors/enterprises only need to fill in the information to receive the results through the link that the Business Registration Department sends after approving the dossiers. The results are delivered by mail. This helps to save time, effort and travel costs for investors/enterprises. This may be an approach that many municipalities should use next time to optimize administrative procedures for investments and businesses.
The processing time for dossiers is extended depending on the “point of view” of the relevant authority
Currently, under normal circumstances, the single-window department, upon receiving dossiers (whether submitted online or as paper documents), conducts a thorough check of the completeness and validity of the dossiers before transferring them to the processing department. This is reasonable because the completeness and validity check still requires human intervention and machines cannot meet the specific requirements in this case.
However, in many cases, the dossier receiving department extends the processing time by asking investors/companies to submit additional documents beyond the prescribed list or by imposing additional requirements without a valid basis for implementation. This practice not only causes inconvenience, but also leads to delays in the investment progress of investors/enterprises.
Sources: Internet
In the course of providing services to our clients, especially in procedures related to investments such as capital contribution, share acquisition, and purchase of capital contribution by foreign investors (M&A approval), we have encountered numerous cases where the receiving department requires the investor (individual) to initial each page of documents and the company to affix its seal to the documents, or more specifically, the investor must provide proof of entry into Vietnam in order to be able to sign documents in Vietnam.
In addition, although such documents as the Registration of Capital Contribution/Share Purchase/Contributed Capital Purchase have prescribed forms, some receiving departments still require investors/enterprises to complete additional commitments based on specific situations. For example, a commitment that the economic organization will carry out procedures to change the type of enterprise after the new investor receives the transfer of contributed capital in a single-member limited liability company. This obligation is of little significance, since in this case the procedure for registering the change in the type of organization is obligatory after the parties have completed the capital transfer. Therefore, the economic organization is not obliged to make such commitments during the M&A approval procedure. Moreover, the approval of the acquisition of the contributed capital is only an initial condition for the parties to proceed with the transaction. The transaction may not be consummated even if it is approved by the competent authority. Therefore, the commitments requested for completion by the department receiving the dossier are considered more inappropriate.
At present, Decree No. 31/2021/NĐ-CP also clearly stipulates that investors are responsible for the legality, accuracy and truthfulness of the content of their documents submitted to the competent state authorities. At the same time, the dossier receiving department is responsible for verifying the validity of the submissions and is not allowed to request investors to submit additional documents beyond those required by the Investment Law and the aforementioned Decree. Therefore, it can be said that the concerns or requests raised by the Dossier Receiving Departments in some localities may currently be somewhat unnecessary and may affect the progress of investment activities.
Benefits of administrative procedure reform
It is obvious to everyone that the administrative procedures reform brings many benefits to investors and businesses. However, in the investment and enterprise sector, the simplification of administrative procedures has numerous positive effects on the overall development of the country. In the current economic difficulties, both the government in general and provinces and cities in particular are actively strengthening their appeal to promote investment and attract foreign capital.
Typically, in order to carry out investment activities in Vietnam, foreign investors often go through various stages, including market research, selecting investment sites, carrying out construction, and recruiting labor, among other activities. Completing administrative procedures related to investment and business in the initial stage is only a small part of the entire investment process for foreign investors. Therefore, in order not to become an obstacle to the investment activities of foreign investors, it is necessary to carry out more extensive reforms in the process of handling and resolving investment dossiers.
Although we are in the process of digitizing investment procedures, these procedures still need to be synchronized and unified across provinces and cities in the country so that investment procedures are no longer localized.
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