An Investment License is not only the legal basis for investors to conduct their projects, but also serves as a mechanism for close supervision and management by competent state authorities to ensure that projects are implemented in compliance with regulations, on schedule, and with socio-economic efficiency. Below, NPLaw respectfully invites our readers to explore the legal issues related to the implementation of projects in accordance with Investment Licenses.
An Investment License is not only the legal basis for investors to conduct their projects, but also serves as a mechanism for close supervision and management by competent state authorities to ensure that projects are implemented in compliance with regulations, on schedule, and with socio-economic efficiency. Below, NPLaw respectfully invites our readers to explore the legal issues related to the implementation of projects in accordance with Investment Licenses.
I. Current status of the implementation of projects in accordance with Investment Licenses
1. Procedures for implementing a project in accordance with the investment license
The procedures for implementing a project under the Investment License comprise the main stages from licensing to project deployment and operation. First, the investor must apply for an Investment Registration Certificate, prepare a complete dossier, and submit it to the Department of Planning and Investment or the Management Board of industrial parks, export processing zones, hi-tech zones, or economic zones (depending on the competent authority).
After the License is granted, the investor is required to contribute capital in accordance with the committed schedule and complete relevant legal procedures such as obtaining an Enterprise Registration Certificate, implementing tax registration, applying for a construction permit (if any), conducting an environmental impact assessment, and satisfying other sector-specific conditions. It is followed by the construction and implementation phase, including installation of facilities, recruitment of personnel, and trial operation. During the implementation process, the investor may need to adjust the project if there are changes to capital, scale, objectives, or implementation schedule. Finally, once the project officially comes into operation, the investor must comply with regulations on reporting the project’s implementation status, fulfilling financial and tax obligations, and other legal requirements.
2. Common difficulties in implementing projects in accordance with investment licenses
In practice, investors often encounter various difficulties when implementing projects under Investment Licenses, including complex legal procedures, particularly in cases of project adjustment, extension, or transfer. Capital contribution schedules and capital mobilization also pose significant challenges, especially for projects with large total investment capital or long capital recovery periods. In addition, issues related to site clearance, delayed land handover, and changes in planning may directly affect project implementation progress. Moreover, requirements concerning environmental protection, technology, construction permits, and other investment-related legal regulations may also create troubles during the implementation process.
II. Legal regulations on the implementation of projects in accordance with Investment Licenses
1. Which cases are required to implement projects under the Investment License?
Pursuant to the Law on Investment 2020, cases required to implement projects under the Investment License include:
- Investment projects of foreign investors in Vietnam.
- Investment projects of economic organizations falling into one of the following cases (pursuant to Clause 1, Article 23 of the Law on Investment 2020):
+ Foreign investors hold more than 50% of charter capital, or in the case of partnerships, the majority of general partners are foreign individuals;
+ Economic organizations hold more than 50% of charter capital;
+ Foreign investors and economic organizations jointly hold more than 50% of charter capital.
Accordingly, the above cases are required to complete procedures for obtaining an Investment Registration Certificate prior to project implementation.
2. What is the duration for implementing a project in accordance with the Investment License?
The duration for implementing a project under the investment license is determined in accordance with Article 44 of the Law on Investment 2020. Specifically, the operation duration of an investment project must not exceed 70 years for projects located in economic zones and must not exceed 50 years for projects outside economic zones. In certain special cases, such as projects implemented in areas with difficult or particularly difficult socio-economic conditions, or projects with large investment capital and slow capital recovery, the duration may be extended but must not exceed 70 years.
If the State allocates or leases land to the project but the investor is delayed in receiving land handover, such delayed period shall not be included in the project’s operation duration. Upon expiration of the duration, if the investor wishes to continue implementing the project and satisfies statutory conditions, an extension may be considered but must not exceed the maximum duration, except for projects using obsolete technologies, causing environmental pollution, or projects subject to compulsory transfer of assets without compensation to the State or the Vietnamese party.
3. Competent authorities for licensing the implementation of projects in accordance with Investment Licenses
The authority to grant licenses for project implementation in accordance with Investment Licenses is stipulated in Article 39 of the Law on Investment 2020 and Article 34 of Decree No. 31/2021/ND-CP, specifically as follows:
The Department of Planning and Investment has the authority to grant, amend, and revoke Investment Registration Certificates for:
- Investment projects implemented in two or more provincial-level administrative units;
- Investment projects implemented both inside and outside industrial parks, export processing zones, hi-tech zones, or economic zones;
- Investment projects implemented within industrial parks, export processing zones, hi-tech zones, or economic zones where no management board has been established or where the area does not fall under the management authority of the management board.
The Management Board of industrial parks, export processing zones, hi-tech zones, or economic zones has the authority to grant, amend, and revoke Investment Registration Certificates for:
- Investment projects for the construction and business of infrastructure within industrial parks, export processing zones, hi-tech zones, or functional zones in economic zones;
- Investment projects implemented within industrial parks, export processing zones, hi-tech zones, or economic zones.
III. Clarification of certain issues related to the implementation of projects in accordance with Investment Licenses
1. What is the time for capital contribution to implement a project in accordance with the Investment License?
The time for capital contribution to implement a project under the Investment License is determined based on the investor’s commitment and is clearly stated in the Investment Registration Certificate. According to legal regulations and practical application, the common time for full capital contribution is typically three (03) months from the date of issuance of the Investment Registration Certificate, as provided in Clause 2, Article 47 of the Law on Enterprise 2020. However, for projects with large total investment capital or projects involving construction or renovation of factories, the capital contribution period may be extended up to two (02) years, depending on the scale and specific characteristics of the project.
2. How are violations handled when implementing projects in accordance with investment licenses?
Pursuant to Article 19 of Decree No. 122/2021/ND-CP, violations related to the implementation of investment projects in Vietnam shall be subject to the following sanctions:
- A fine ranging from 50,000,000 VND to 70,000,000 VND shall be imposed for the following violations:
- Failure to make a security deposit or provide a bank guarantee to ensure the implementation of an investment project involving land use;
- Failure to implement procedures for securing project implementation within the prescribed time;
- Increase of investment capital without making an additional security deposit when requested by the competent authority;
- Making unlawful or untruthful declarations in the dossier to obtain a reduction in project implementation security costs.
- A fine ranging from 70,000,000 VND to 100,000,000 VND shall be imposed for the following violations:
- Failure to implement the project in accordance with the contents of the Investment Registration Certificate or the investment policy approval;
- Failure to implement project liquidation procedures and fulfill financial obligations upon project termination;
- Suspension of an investment project’s operation for more than 12 consecutive months.
- A fine ranging from 100,000,000 VND to 200,000,000 VND shall be imposed for the following violations:
- Implementation of an investment project before being granted an Investment Registration Certificate or investment policy approval;
- Business operation despite a decision on suspension or partial suspension issued by a competent authority.
These sanctions are intended to ensure investors’ compliance with legal regulations when implementing projects in Vietnam.
3. Can a project be extended upon expiration of its Investment License?
Pursuant to Clause 4, Article 44 of the Law on Investment 2020, upon expiration of the project’s operation duration, if the investor wishes to continue implementing the project and satisfies statutory conditions, the operation duration may be considered for extension but must not exceed the maximum duration (70 years in economic zones and 50 years outside economic zones).
The following projects are not eligible for extension:
- Projects using obsolete technologies, posing risks of environmental pollution, or being resource-intensive;
- Projects subject to compulsory transfer of assets without compensation to the State of Vietnam or the Vietnamese party in accordance with regulations.
4. May investors amend the contents of the Investment License during project implementation?
Investors may amend the contents of the Investment License during the implementation of the project. It is stipulated in Article 41 of the Law on Investment 2020, under which investors are entitled to adjust certain contents of the investment project, provided that procedures for amendment of the Investment Registration Certificate are implemented if there are changes to the contents stated therein.
5. Is it permissible to transfer a project before fulfilling all conditions of the Investment License?
Pursuant to Article 46 of the Law on Investment 2020, investors are entitled to transfer all or part of an investment project even if the project has not been completed, provided that the following conditions are satisfied:
- The project does not fall under cases subject to termination according to Clauses 1 and 2, Article 48 of the Law on Investment 2020;
- The new investor (the transferee) must satisfy statutory conditions:
+ Foreign investors must comply with market access conditions (Clause 2, Article 24 of the Law on Investment 2020);
+ Projects associated with land use rights must comply with land law regulations on conditions for transfer of land use rights and assets attached to land;
+ Real estate and housing construction projects must comply with regulations on housing and real estate business;
+ Conditions stipulated in the Investment Registration Certificate or investment policy approval must be satisfied; - State-owned enterprises transferring projects must comply with regulations on management and use of state capital prior to project adjustment.
Accordingly, the transfer of an investment project prior to completion is permissible, provided that the investor fully satisfies all legal conditions related to the type of project, land use rights, investment regulations, and the status of the investor.
IV. Legal consulting services related to the implementation of projects under investment licenses
Above is NPLaw’s article on the implementation of projects under investment licenses. With a team of experienced lawyers and legal specialists, NPLaw is always ready to accompany, consult, and support clients on matters related to the implementation of projects under investment licenses. Should you require legal assistance, please contact NPLaw using the following information:
