Vietnam continues to develop and update the legal framework and investment to encourage the investment activities in Vietnam. This briefing focuses on the important changes under the Law on Investment 2020 (the “New Law”), which will take effect from 01 January 2021.
Key New Issues
Negative-list approach for market access conditions for foreign investors
New sectors entitled to investment incentives
New special investment incentives schemes
New criteria for determination of Foreign Investor Equivalent
Changes in requirements for M&A Approvals
Clarifications for investor selection procedures
In-principle approval for investment projects
Protection to national defense and security
Market access conditions for foreign investors
The New Law applies a “negative-list” market access restrictions for foreign investors. Outside of this list, foreign investors are entitled to the same market access conditions as applicable to domestic investors. The “negative-list” market will be provided under the Decree of the Government.
New investment incentives
The New Law introduces new business sectors that are entitled to investment incentives in addition to those carried over from Law on Investment 2014. These new sectors include, among others, innovative start-up projects, college education, research and development centers. Accelerated depreciation and increase in deductible expenses upon calculation of taxable income were added as new investment incentive forms.
Special investment incentives and supports
The Government can decide to apply special incentives and supports to encourage projects that have large socio-economic impacts, in particular:
Investment project of establishing R&D centers with minimum capital of VND3,000 billion and disbursing at least VND1,000 billion within 03 years from the issuance date of the investment registration certificate or in-principal approval;
Investment project of establishing the national innovative center under a decision of the Prime Minister; and
Investment projects under the list of especially encouraged sectors, having a minimum capital of VND30,000 billion and disbursing at least VND10,000 billion within 03 years from the issuance date of the investment registration certificate or in-principal approval.
Change in criteria for determination of Foreign Investor Equivalent
Under the New Law, the condition for an economic organization to be subject to regulations applicable to foreign investors (“Foreign Investor Equivalent”) is reduced from “at least 51%” to “more than 50%” threshold of charter capital contribution.
Changes in requirements for M&A Approval
Under the New Law, a foreign investor is required to implement for obtaining the approval for M&A transaction (“M&A Approval”) if the acquisition leads to (i) an increase in foreign ownership in a company engaging in business lines with market access conditions, (ii) an increase in foreign ownership in a company from 50% or less to more than 50% of charter capital, or (iii) a further increase in foreign ownership if it has been more than 50%. Besides, a new case when M&A Approval required is the acquisition of a company which has a land use right certificate on an island, a coastal or border commune, ward or town or in another area which affects national defence and security.
Selection of investors
The New Law introduces a new provision in order to clarify the principles and conditions for selection of investors that implement projects. Selection methods is conducted by any of the following methods :
Auction of land use right is implemented in accordance with the law on land;
Tendering for selection of investor is implemented in accordance with the law on tendering; and
Approval of the investor.
The steps for selection of investor would be as follows:
The cases (i) and (ii) above are subject to 2 following steps:
Step 1: In-principle approval for investment.
Step 2: Auction of land use right or tendering for selection of investor.
If only one person registers to participate in the auction or if the auction is unsuccessful, or if only one investor registers to participate in the tendering, the authority shall conduct procedures to approve an investor if such investor satisfies the conditions prescribed in relevant law.
The case (iii) is subject to Step 1 above.
In-principle approval for investment projects
The New Law clarifies some criteria are provided to determine whether an investor must conduct procedures for in-principle approval amendments, particularly when, among others:
The land area is changed by more than 10% or more than 30 hectares;
The total investment capital is changed by 20% or more, resulting in the change in scale of project; or
The implementation schedule of the investment project is extended resulting in the total duration of the investment project extended more than 12 months beyond the initial in- principle approval.
However, the New Law prohibits extension of implementation schedule of the investment project by more than 24 months, except in cases of force majeure, delay in land allocation by the State, changes in planning by a regulatory agency, changes in investment objectives, or changes in total investment capital by 20% or more resulting in the change in the scale of the project.
Protection to national defense and security
Under the New Law, the investment registration authorities are permitted to terminate a project in whole or in part if the investor is found to conduct the investment activities on the basis of a false civil transaction. Besides, the Prime Minister is permitted to suspend a project in whole or in part if implementation of the project infringes upon or threats to infringe upon national defense or security. If the investor is incapable of remedying the situation to continue investment after suspension, the project may be terminated.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
