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.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
