Streamlining plan set for approval process

The Government of Vietnam has announced a series of reforms aimed at streamlining investment administration, with the objective of enhancing state management, improving decentralization, and creating a more transparent, efficient, and investor-friendly environment.

One of the key issues highlighted for reform is the approval of investment planning. Economic expert Nguyen Dinh Cung and Nguyen Van Toan, chairman of the Vietnam Association of Foreign Investment Enterprises, have both voiced concerns about the impact of this process on investors and the business environment in general.

The duplication of appraisal and approval processes creates a burden for the private sector, according to Toan. This requirement for enterprises to submit financial capacity documents, which may include financial statements for the last two years, implies that the investor must have existed for at least two years. This eligibility barrier, as explained by Cung, makes it difficult for newly established private enterprises to invest or even prepare an application.

To address these concerns, numerous proposals have been put forward. Relaxing the investment planning approval regulation could reduce approximately 30% of administrative processing time, at least 30% of compliance costs, and at least 30% of business conditions, as per Toan. Changes will ensure that formal approval requirements will only apply to initiatives with significant environmental impacts, those affecting national defense and security, and large-scale investment undertakings.

The authority to approve investment policies will continue to be delegated from the prime minister to people's committees in localities for undertakings by foreign investors in certain sectors. The National Assembly will only green-light policies for ventures that require special policies necessitating its decision.

Reducing the steps for investment planning is considered an optimal solution in revising the Investment Law. The new law version promotes decentralization and delegation of authority, thereby narrowing the scope of activities requiring central-level approval.

However, the process is not without its challenges. Enterprises are forced to repeatedly supplement and adjust details, particularly regarding scale, progress, and timelines, creating additional risks for investors if there are changes compared to the policy, according to Cung. The duplication of appraisal and approval processes limits innovation and obscures management objectives, as stated by Cung.

The Ministry of Finance (MoF) is finalizing amendments to the draft Law on Investment for review in October. The relaxation of the investment planning approval regulation, as suggested by Toan, could lead to significant time and cost savings for investors, thereby accelerating implementation and enabling operations to commence sooner.

As these reforms are implemented, it is hoped that Vietnam will continue to attract foreign investment, fostering economic growth and development.

Streamlining plan set for approval process