Why does the Government continue to propose amendments to the Law on Investment 2020?

Vietnam's Investment Law 2020 has served as an important foundation in shaping the country's investment landscape, promoting economic growth and integration with global trends. However, as Vietnam faces the complex challenges of a rapidly changing global economy, technological advancements, and domestic development priorities, the Government has recognized the need to amend this law.

The most recent amendment to the Law on Investment 2020 was in November last year, when the National Assembly passed Law No. 57/2024/QH15 amending a series of laws, including the Law on Investment. However, up to now, the Government has issued a Draft for comments on amendments to laws, including the Law on Investment 2020.

Source: The Saigon Times

The proposed amendments, as stated in the recent Draft documents,[1] have shown that the proposed amendment to the Law on Investment 2020 this time aims to address emerging challenges, improve economic competitiveness, and promote innovation and sustainable development of Vietnam in the coming time.

Removing bottlenecks, encouraging investment in technology

A key impetus for amending the Law on Investment 2020 is to align with Vietnam's goals on science, technology and innovation (STI).

Resolution No. 57-NQ/TW dated December 22, 2024 of the Politburo emphasizes breakthroughs in STI and digital transformation to position Vietnam as a leading country in the region in these fields. The resolution calls for policies to remove bottlenecks, mobilize resources and encourage investment in research, technology application and innovation.

The current Law on Investment, although it has been developed quite comprehensively, lacks specific regulations to encourage investment in the fields of high technology, digital infrastructure and innovative startups.

The proposed amendments aim to introduce mechanisms such as tax incentives, priority land allocation, and simplification of administrative procedures to attract domestic and foreign investors to these priority areas. In the document, the Draft emphasizes the need for policies to support the Internet of Things (IoT) industry and the development of digital infrastructure, which requires significant involvement from the private sector.

Supporting industrial growth goals and the digital economy

Resolution No. 192/2025/QH15 of the National Assembly sets an ambitious economic growth target of 8% in 2025. To achieve this, the government seeks to promote export-based growth and increase domestic value, while reducing dependence on raw material exports.

The Investment Law 2020 needs to be amended to support these goals by providing incentives to industries that contribute to value-added manufacturing, such as the semiconductor industry and manufacturing enterprises that apply advanced technologies.

In addition, the Prime Minister's Decision No. 1018/QD-TTg has also outlined a strategy for the development of Vietnam's semiconductor industry to 2030, with a vision to 2050.

This strategy requires a favorable investment environment, including rapid mechanisms for ancillary enterprises and import and export activities. The proposed amendments aim to create a "green lane" for these industries, reduce bureaucratic barriers and promote a competitive investment environment.

Clearly delineate the competence to approve investment

One of the key issues identified in the Law on Investment 2020 is the ambiguity of the authority to approve investment projects, especially for the construction of ports and port areas.

According to Article 31 of this Law, the Prime Minister is competent to approve projects related to the construction of special ports or grade-I ports with an investment capital of VND 2,300 billion or more. Meanwhile, Article 32 assigns authority to provincial-level People's Committees for other projects, including those that require land allocation or change of land use purpose.

However, the law does not clearly mention the approval authority for grade II and grade III ports or grade I ports with an investment capital of less than VND 2,300 billion. This gap has led to inconsistencies in implementation, causing delays and confusion for investors.

The amendments introduced in Law No. 57/2024/QH15[2] effective from January 15, 2025 have partially solved this issue by amending Articles 31 and 32 to clarify that provincial People's Committees have jurisdiction over class II and class III ports and smaller-scale class I ports. In this Draft, the Government proposes to continue to refine to ensure consistency and eliminate remaining ambiguities, as recommended by the Ministry of Finance.

Simplifying administrative procedures

The Law on Investment 2020 has been highly appreciated for establishing a unified legal framework for investment activities. However, stakeholders, including the Vietnam Confederation of Commerce and Industry (VCCI), have noted that administrative procedures are still cumbersome, especially for projects related to land allocation and public-private partnerships (PPPs).

For example, Article 44 of the Law on Investment 2020 stipulates that delays in handing over land from the state are not included in the project's operating term. However, this does not address cases where land has not been allocated, resulting in an extension of the project implementation time.

The proposed amendments aim to amend Article 44 to explicitly cover cases where land has not been allocated, ensuring that these delays do not affect investors. This change aims to strengthen investor confidence and reduce risks during project implementation.

In addition, the Government seeks to simplify the procedures for approving feasibility study reports and econo-technical reports for PPP projects, as outlined in the document, in order to expedite the process of project preparation and implementation.

Source: The Saigon Times

Strengthening incentives for domestic production and export

By amending the Law on Investment, the Government aims to introduce incentives to investors in industries that produce high-domestic value-added goods. This is in line with the broader goal of reducing dependence on imported raw materials and promoting autonomy in critical sectors such as semiconductors and IoT.

Vietnam's integration into the global supply chain has increased the importance of effective import and export mechanisms, especially for on-the-spot import and export.

The draft emphasizes the need to legislate these mechanisms in the Customs Law and the Import and Export Tax Law, but additional changes in the Investment Law are also necessary. For example, the Government proposes incentives for export-oriented projects and simplifies customs procedures for investors in export processing zones.

These amendments are intended to reduce logistics costs and customs clearance time, bringing Vietnam's processes on par with regional standards such as Malaysia and the Philippines, where customs clearance takes only 2-3 hours. By creating a more investor-friendly environment, the government seeks to attract foreign direct investment (FDI) into export-oriented industries.

Ensure compatibility and consistency with domestic and international legislation

The proposed amendments to the Investment Law 2020 are part of a broader effort to ensure consistency across Vietnam's legal framework.

The Ministry of Science and Technology is currently developing the Law on Science, Technology and Innovation as well as the Law on Digital Technology Industry, which overlaps with the Law on Investment in areas such as innovation incentives and technology investment.

To avoid conflicts, the Government proposes a thorough review to synchronize the definitions, incentives and management mechanisms between these laws.

Vietnam's participation in international trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), requires Vietnam's laws to comply with global standards.

The proposed amendments are intended to ensure that regulations on investment incentives, bidding priorities and import and export regulations are consistent with these commitments, particularly with regard to rules of origin and non-discriminatory treatment of foreign investors.

The Government's proposal to amend the Law on Investment 2020 this time is based on extensive consultations with stakeholders, including local governments, businesses and industry associations. These comments underscore the Government's commitment to creating a responsive and inclusive legal framework that balances national priorities and the interests of investors and local communities.

The Government's proposal to amend the Law on Investment 2020 is a strategic response to Vietnam's changing economic, technological and global integration needs.