Vietnam's new action plan to facilitate Japanese investors

After ranking Vietnam’s largest investor last year, Japan continued overcoming 86 countries and territories to maintain the leading position in the first half of this year with total registered capital of US$6.47 billion, accounting for 31.8 percent of Vietnam’s total FDI in the period.
  Though the business and investment environment in Vietnam has been improved a lot in the past years and Japanese investors have considered Vietnam an attractive destination, they recommended that there have remained some hindrance that need to be resolved to further facilitate investors, including those from Japan.
Japanese investors have made 65 recommendations regarding regulations on investment in Vietnam for foreign investors as prescribed in the Law on Investment, the Law on Enterprises, the Land Law and other relevant laws.
According to the investors, the removal of retroaction for incentives approved in investment certificates and business registration caused difficulties for foreign investors and even unpredictable losses. Besides, while the Law on Investment in 2005 had regulations to ensure foreign investors’ legitimate rights, the current Law on Investment does not.
In regards to salary and labor, overtime and sectors subject to labor leasing remain major problems for Japanese investors, making them insecure about their future developments.
As for the public-private partnership (PPP) legal framework, Japanese investors are concerned about the transformation of public projects into PPP projects, especially when using official development assistance (ODA) funds; incentives for PPP bidders; government guarantees for foreign currency exchanges and conditions for contract cancellations; and land use rights and land-related asset mortgages.
Fine-tuning policies
Under a new action plan of the VJJN, which helps competent Vietnamese ministries and agencies streamline laws and policies, officials from MPI affirmed that most of the Japanese recommendations will be resolved from now to the end of next year.
According to the VJJI’s memorandum of understanding, which has been signed recently by the MPI, the Japanese Embassy in Vietnam and the Vietnam-Japan Economic Committee under the Japan Business Federation, the plan will resolve ten groups of issues, including regulations for foreign investors in Vietnam as prescribed in the laws on Investment and Enterprises, the Land Law, and others.
The document will also address the reform of state-owned enterprises and the stock market; supporting industry development policies; labor and salary; the legal framework for PPP; the legal framework for the construction of gas pipelines; and the establishment of companies and opening of branches in the services sector.
The new action plan will work on the policies for keeping retroaction for incentives approved in the aforementioned legal documents, while amending Article 13 of the Law on Investment towards adding more subjects to be ensured with legitimate rights.
In regards to salary and labor, under the new plan, both sides will discuss the possibility of revising these regulations towards allowing them to decide the overtime cap based on their work demands, in line with prevailing rules, while enlarging the list of sectors subject to labor leasing.
As for the PPP legal framework, Nguyen Dang Truong, director of the MPI’s Public Procurement Department (PPA), said that the PPA is working with the Japan International Cooperation Agency (JICA) on building a legal mechanism for the use of ODA as Vietnam’s counter-funding in PPP projects, then creating an important foundation for development in the PPP Law, which will be considered at the National Assembly in November 2019 and is slated to be approved in May 2020.