Major Changes of the New Investment Law (NIL) at a Glance

On 17 July 2020, the National Assembly of Vietnam issued Investment Law No. 61/2020/QH14 which will replace the current Investment Law No. 67/2014/QH13 of 26 November 2014 as of 1 January 2021.

Please run through key changes in bullet points as follows.

1. 1. Prohibition of ‘debt collection’ services and, still, the highly controversal prostitution; addition and removal of some conditional business activities (Article 6 and 7).
   2. First time introduction of negative approach to foreign investment (Article 9).
   3. Addition of special investment incentives (Article 20).
   4. The change of control threshold, which is employed to determine ‘foreign investor’ status of a Vietnam-based company, is reduced from less than 51% to more than 50% (Article 23).
   5. Tigher control of M&A in projects at sensitive areas such as islands, border areas or coastal areas (Article 26).
   6. For land-related projects, no auction or bidding requirements in case of industrial zone development projects; or the investors’ having land use rights or acquired land by way of receipt transfer, capital contribution or lease (Article 29).
   7. Projects of VND500 billion (approx. US$21.5 mil) no longer subject to in-principle approval of the Prime Minister (Article 31).
   8. During in-principle approval licensing process, only the preliminary environmental impact assessment is required (Article 33);
   9. In-principle approval must be sought again if, among others, land area increases by 10% or more or over 30 hectares; or investment capital increases by 20% or more (Article 41).
   10. Changes of investment schedules must not exceed 24 months against the initially-approved schedules.
   11. Land-related projects can be secured by either deposit placement or bank guarantees (Article 43).
   12. Extention of project’s lifespan is possible (Article 45).
   13. Investment projects can be forcefully terminated if it is deemed to be made on ‘fabricated’ transaction’s basis i.e. – a transaction that is created in order to hide another real transaction.