Local and foreign enterprises are set to benefit from a clearer set of Enterprise Law instructions. In its final meeting of the 2002-2007 term, the government approved a draft decree that will help guide the law’s implementation, most notably clarifying instructions for foreign investors.
Under the draft decree, any enterprise with foreign ownership equalling 49% or less of chartered capital can register in the same manner as a domestic firm.
Tran Xuan Lich, vice head of the Central Institute of Economic Management under the Ministry of Planning and Investment, said the draft was progressive as it allowed an enterprise with foreign stake no more than 49% to be established even if it had not secured any investment projects.
“The draft decree, which will be released soon, helps foreign investors find easier ways to approach and study the real situation in the country before making any investment decisions,” Lich said.
Bisconsult law firm partner Nguyen Dang Viet said the draft decree would support foreign investors in the early stages of entering the Vietnamese market.
“They will not have to put together impractical or unrealistic plans just to get a business licence like they did before,” said Viet.
However, an enterprise whose foreign owners contribute more than 49% of chartered capital will be required to have a specific investment project on the cards, the draft stipulated. In this case, the enterprise will be required to register its business and investment projects with the authorities simultaneously. Its investment certificate will then become its business licence.
The government’s draft decree also includes guidelines on the operation of both local and foreign firms under the new Enterprise Law, including the rights of capital contribution and share holding, the establishment of foreign-invested subsidiaries and representative offices, the transformation of limited liability firms into holding companies and enterprise dissolution.
The government’s slow pace in guiding the implementation of the new Enterprise Law, effective from July 1, 2007, has caused confusion among investors and approval-granting authorities.