ESTABLISHMENT OF AND CAPITAL CONTRIBUTION TO ENTERPRISES OF FOREIGN INVESTORS IN ACCORDANCE WITH VIETNAMESE REGULATIONS

MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF LAW -*** - MANAGEMENT COMMITTEE OF SPECIAL PROGRAMS LÊ TRUNG ESTABLISHMENT OF AND CAPITAL CONTRIBUTION TO ENTERPRISES OF FOREIGN INVESTORS IN ACCORDANCE WITH VIETNAMESE REGULATIONS BACHELOR OF LAW – GRADUATION THESIS FACULTY: COMMERCIAL LAW ACADEMIC YEAR: 2013 – 2017 HO CHI MINH CITY 2017 MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF LAW -*** - MANAGEMENT COMMITTEE OF SPECIAL PROGRAMS LÊ TRUNG ESTABLISHMENT OF AND CAPITAL CONTRIBUTION TO ENTERPRISES OF FOREIGN INVESTORS IN ACCORDANCE WITH VIETNAMESE REGULATIONS BACHELOR OF LAW – GRADUATION THESIS FACULTY: COMMERCIAL LAW ACADEMIC YEAR: 2013 – 2017 SUPERVISOR: DR TRẦN HOÀNG NGA AUTHOR: LÊ TRUNG STUDENT ID NUMBER: 1353801011260 CLASS: CLC38B HO CHI MINH CITY 2017 DECLARATION I hereby declare that this thesis is my own research under the supervisory guidance of Dr Tran Hoang Nga All of the information other than my opinions to be used or quoted has been acknowledged by means of complete references I would take full accountability for my protest Author Lê Trung LIST OF ABBREVIATIONS ABBREVIATION BRA BRC DPI ERC FDI FTAs IC IRA IRC LOI 2005 LOE 2005 LOI 2014 LOE 2014 TPP WTO CONTENT IS ABBREVIATED Business Registration Authority Business Registration Certificate Department of Planning and Investment Enterprise Registration Certificate Foreign direct investment Free Trade Agreements Investment Certificate Investment Registration Authority Investment Registration Certificate Law on Investment (Law No 59/2005/QH11) dated November 29, 2005 Law on Investment (Law No 60/2005/QH11) dated November 29, 2005 Law on Investment (Law No 67/2014/QH13) dated November 26, 2014 Law on Enterprises (Law No 68/2014/QH13) dated November 26, 2014 Trans-Pacific Partnership Agreement World Trade Organization TABLE OF CONTENTS INTRODUCTION .1 1.1 Concept of foreign investor 1.2 Forms of investment and practical role of investment into enterprises in relation to foreign investors 1.2.1 Forms of investment .8 1.2.2 Practical role of investment into enterprises in relation to foreign investors .12 1.3 Conditions for investment by establishment of and capital contribution to enterprises operating in conditional business lines 13 CHAPTER ESTABLISHMENT OF ENTERPRISES OF FOREIGN INVESTORS 18 2.1 Regulations 18 2.1.1 Overview 18 2.1.2 Procedures for issuance of IRC 20 2.1.3 Procedures for issuance of ERC 22 2.1.4 Mechanism for cooperating in resolving procedures for issuance of IRC and ERC 25 2.2 Shortcomings 26 2.2.1 ERC Lack of respectfulness to time limitation for issuance of IRC and .27 2.2.2 Some rampant procedures 28 2.2.3 The overlaps in regulations 28 2.3 Remarks 31 2.3.1 Promulgating guiding documents to solve the lack of respectfulness to time limitation for issuance of IRC and ERC 31 2.3.2 Promulgating guiding documents to solve overlaps of regulations 32 2.3.3 Improving, simplifying and clarifying administrative procedures 33 CONCLUSION OF CHAPTER 35 CHAPTER CAPITAL CONTRIBUTION TO ENTERPRISES OF FOREIGN INVESTORS 36 3.1 Regulations 36 3.1.1 Overview 36 3.1.2 Initial steps relating to capital contribution procedures 38 3.1.3 Procedures for registration of capital contribution 39 3.1.4 Procedures for changing members/shareholders of enterprises receiving capital contribution 40 3.1.5 Cooperation mechanism of procedures relating to capital contribution registration 42 3.2 Shortcomings 43 3.2.1 Lack of uniformed regulations on investment capital accounts .43 3.2.2 Lack of uniformed regulations on adjusting ERC and IRC of enterprises receiving capital contribution 45 3.3 Remarks 45 3.3.1 Reforming regulations on investment capital accounts 46 3.3.2 Reforming regulations on adjusting ERC and IRC of enterprises receiving capital contribution 47 CONCLUSION OF CHAPTER 48 CONCLUSION 49 BIBLIOGRAPHY APPENDIX INTRODUCTION Reason for conducting this thesis In the event of increasing growth in global integration, an objective requirement set for each country to survive is the implementation of international cooperation, which is also one of the key measures for the development of socioeconomic in the five years 2016 – 2020 in the Twelfth National Congress of the Communist Party of Vietnam.1 Although Vietnam’s economy slowed down in 2016, FDI sectors still reached nearly US $16 billion (7.7% of GDP) When conducting the investment in Vietnam, foreign investors may select any appropriate forms of investment in accordance with Vietnamese regulations.3 In the year 2016 (up to December 26, 2016), Vietnam had 2,556 projects newly issued the Certificates of Investment with a total registered capital of US $15.18 billion, increasing by 27% in the number of projects of the year 2015 Besides that, there were 1,225 projects registering to adjust to increase the investment capital with the total registered capital of US $5.76 billion, increasing by 50.5% in the number of projects of the year 2015 Also in the year 2016, there were 2,547 enterprises, economic organizations having foreign investors contributing capital, buying shares with a holding capital of more than 50% of charter capital or pertaining to the conditional investment sectors with the total investment amount of US $3.425 billion.4 These data above clearly show that the level of trust of foreign investors in Vietnam’s business environment is positively increasing and strongly affirm that Vietnam is one of the attractive locations for them In order to achieve this success, with our desire to create favourable conditions for foreign investors, the deepthinking reform of the LOI 2014 and the LOE 2014 is one of the key factors that have spread a new spirit for Vietnam’s business environment.5 Luu Ngoc Khai, Dang Cong Thanh, “The Party’s foreign policy in the spirit of the Twelfth Congress Resolution – A new height” (“Đường lối đối ngoại Đảng theo tinh thần Nghị Đại hội XII – Một tầm cao mới”) http://www.tuyengiao.vn/Home/nghi-quyet-dai-hoi-dang/92923/Duong-loi-doi-ngoai-cuaDang-theo-tinh-than-Nghi-quyet-Dai-hoi-XII-Mot-tam-cao-moi, last access on May 11, 2017 See more: “World Bank: Optimistic about development of Vietnam’s economy” (“Ngân hàng Thế giới: Lạc quan phát triển kinh tế Việt Nam”), http://tapchitaichinh.vn/kinh-te-vi-mo/kinh-te-dau-tu/ngan-hang-thegioi-lac-quan-ve-phat-trien-kinh-te-viet-nam-106924.html, last access on May 12, 2017 Investors may invest capital to business by establishing a business organization; making capital contribution, buying shares or capital contributions to a business organization; making investments in the form of contracts or execution of investment projects Department of Foreign Investment (MPI), “Report on Foreign Direct Investment in 2016” (“Báo cáo tình hình đầu tư trực tiếp nước năm 2016”) http://www.mpi.gov.vn/Pages/tinbai.aspx?idTin=35689&idcm=54, last access on May 12, 2017 Dinh Khanh Le, “Attracting Foreign Direct Investment: New challenges” (“Thu hút vốn đầu tư trực tiếp nước ngoài: Những thách thức mới”), http://tapchitaichinh.vn/nghien-cuu trao-doi/trao-doi-binh-luan/thuhut-von-dau-tu-truc-tiep-nuoc-ngoai-nhung-thach-thuc-moi-84530.html, last access on May 12, 2017 1 However, as well as seeing the positive aspects foreign investors bringing to our country, it is foreseeable that there are still some obstacles existing in Vietnam’s legal system After more than one year of implementation of such regulations, there have been inappropriate shortcomings arising, which cause a lot of complexity, cost time and expense of foreign investors Especially, this can seriously lead to the loss of attraction to FDI to Vietnam’s economy When it comes to integration with the development of the whole world, it is necessary to study, find out and assess such regulations in order to be able to come up with solutions to solve those difficulties in order to attract and receive more FDI, which is very necessary for the development of the economy in particular and Vietnam in general It is from the above reasons, with the wish to contribute to the study and perfect such regulations, the author has decided to choose “Establishment of and capital contribution to enterprises of foreign investors in accordance with Vietnamese regulations” as a topic for the graduation thesis Literature review Firstly, as of this moment, regarding theses and scientific researches within the scope of Ho Chi Minh University of Law, there were some theses mentioning about this topic, but they were conducted separately between the “establishment of enterprises of foreign investors” and “capital contribution to enterprises of foreign investors” In regard to “establishment of foreign investors”, the thesis that may be referred is “Thực trạng đầu tư thành lập doanh nghiệp theo Luật Doanh nghiệp nhà đầu tư nước ngoài” – Bachelor of Law’s thesis of the year 2007 of Pham Thi Kim Phuong Besides, there are also two theses similarly mentioning about the establishment of enterprises of foreign investors Namely, "Quyền thành lập doanh nghiệp có vốn đầu tư nước ngồi Việt Nam" – Master of Law’s thesis of the year 2009 of Bui Thi Thuy Trieu; and “Thủ tục thành lập doanh nghiệp có vốn đầu tư nước ngồi” – Bachelor of Law’s thesis of the year 2014 of Nguyen Thi Thu Thuy Nonetheless, those theses presented about the establishment of foreign invested enterprises, so the scopes of these theses are a little bit different from the scope of this thesis due to the fact that the legal status of foreign invested enterprises is now different in comparison with the LOI 2005, which will be mentioned in Section 1.1 However, these above theses were researched while the LOI 2005 and the LOE 2005 were legally valid When the LOI 2014 and the LOE 2014 took effect, regulations on conditions and procedures for establishment of enterprises of foreign investors have been changed and require them more steps as well as documents to submit to competent authorities in order to perform the investment in the form of establishment of enterprises Especially, IC not exist anymore and are replaced by two separate Certificates, which are IRC and ERC obtained by different conditions, and procedures, as well as issued by different competent authorities As regards “capital contribution to enterprises of foreign investors”, though there has been only one thesis, “Quyền góp vốn, mua cổ phần nhà đầu tư nước ngoài” – Bachelor of Law’s thesis of the year 2012 of Tran Thi Mai Quynh, mentioning about this issue, this thesis was also conducted under the regime of invalid regulations, which is inconsistent with current laws In addition, under the current regulations, the concept of foreign investors is regulated differently in comparison with the former In particular, the legal status of foreign invested enterprises has been regulated clearly and no longer considered as foreign investors in some cases as previous As a result, conditions and procedures to perform investment of foreign investors in the form of establishment of and capital contribution to enterprises of foreign investors under the current Vietnamese regulations are different from the former regulations Nonetheless, there has not been any detailed and specific research addressing “Establishment of or capital contribution to enterprises of foreign investors under Vietnamese regulations” Secondly, issues of “establishment of and capital contribution to enterprises of foreign investors” have been mentioned a lot in legal scientific articles Some articles may be listed such as the article “Thủ tục thành lập doanh nghiệp theo Luật Doanh nghiệp năm 2014 việc cải thiện thứ hạng môi trường kinh doanh Việt Nam” of Tran Huynh Thanh Nghi published in the Jurisprudence Journal, Volume 4(179)/2015; or “Tổng thuật hội thảo khoa học Luật Doanh nghiệp Luật Đầu tư năm 2014 – đổi nhằm thực quyền tự kinh doanh” of Tu Thanh Thao and Bui Thi Thanh Thao published in the Legal Sciences Journal, Volume 01(95)/2016; or “Đánh giá số quy định Luật Doanh nghiệp năm 2014” of Nguyen Nhu Chinh published in the Jurisprudence Journal, Volume 01/2016; or “Một số vấn đề pháp luật điều chỉnh hoạt động đầu tư, thương mại doanh nghiệp có vốn đầu tư nước Việt Nam” of Tran Thi Thu Phuong published in the State and Law Review, Volume 9(341)/2016; or “Đổi tư để Luật Doanh nghiệp 2014 vào sống” of Nguyen Dinh Cung published in the Economy and Forecast Review, Volume 15 August 2015 (599); etc However, such issues are only mentioned as a part of such articles or put these issues in relation to other issues Moreover, the scope of those articles only refers to certain aspects of “establishment of or capital contribution to enterprises of foreign investors” such as studying provisions of regulations, pointing out shortcomings and giving recommendations on such regulations in a short and general way which have not been dug profoundly enough Therefore, on the whole, “establishment of and capital contribution of foreign investors in accordance with Vietnamese regulations” have not been studied deeply and separately as an independent research Research objectives The purpose of this thesis is to present and analyse regulations on establishment of and capital contribution to enterprises of foreign investors in accordance with the LOI 2014, the LOE 2014 and legal documents detailing and guiding the implementation Base on that research, the author is able to give out highlights, figure out shortcomings, as well as give remarks on them to perfect the current regulations Through those, we can help foreign investors to avoid psychological fears about some of the ambiguous regulations that are harm to their interests, and to have favourable business conditions Object and Scope of the research Object of the research Concerning the object of the research, this thesis takes on the task of research on problems of establishment of and capital contribution to enterprises of foreign investors in accordance with Vietnamese regulations In particular, some basic legal issues such as the concept of foreign investors, forms of investment in general and practical role of investment into enterprises in relation to foreign investors shall be taken into account In addition, conditions and procedures for foreign investors to conduct the investment in Vietnam in the forms of establishment of and capital contribution to enterprises in accordance with Vietnamese regulations shall be mainly addressed Scope of the research Concerning the scope of the research, this thesis mainly concentrates on research of problems of establishment of and capital contribution to enterprises of foreign investors in accordance with the LOI 2014, the LOE 2014 and legal documents detailing and guiding the implementation which are legally valid, especially not including the establishment of and capital contribution to cooperatives, cooperative associations, and other organizations other than enterprises Additionally, due to the limit of thesis’s pages but there are existing two forms of capital contribution to enterprises including contribution of capital to establish a new enterprise or contribution of additional capital to an existing enterprise, the author only mentions about the issue of contribution of additional foreign investors must be made through their capital accounts opened at banks in Vietnam, except for payment with assets.120 As a result, in the case of a transfer of capital contribution of foreign investors, they only need to transfer money through the capital account of the investors regardless of indirect investment capital accounts or direct investment capital accounts However, in practice, foreign investors are still required to comply with the old regulations since according to the Circular No 131/2010/TT-BTC, foreign investors are required to have investment capital account first but one of the differences between these two accounts is the subject opening such accounts, which means that foreign investors are only entitled to open the indirect investment capital accounts Currently, each bank has different interpretations of these regulations, which makes it difficult for foreign investors to make capital contribution Each bank understands and guides enterprises according to their understanding, and leads to inconsistency in application of regulations As a result, indeed, in order to ensure compliance with all regulations, foreign investors usually transfer money in the following way: foreign investors shall firstly open indirect investment capital accounts, and then request enterprises receiving capital contribution to open their direct investment capital accounts to transfer the capital from indirect investment capital accounts.121 According to this process, the transfer of money is very complicated and difficult, which needs to be provided more documents, money transfer fees Meanwhile, the transfer of money is not fully complied with Circular 05/2014/TTNHNN because the indirect investment capital account is only used for indirect investment purpose Additionally, regarding enterprises receiving capital contribution of foreign investors, the opening of direct investment capital accounts requires enterprises to have an IC, 122 which are also BRC under the LOI 2005 Nonetheless, IC are no longer available, which are replaced by IRC and ERC Thus, in order to open direct investment capital accounts, enterprises receiving capital contribution of foreign investors shall submit both IRC and ERC Meanwhile, in accordance with the LOI 2014, establishment of enterprises with less than 51% of charter capital held by foreign investors is not obliged to apply for issuance of IRC 123 Therefore, in this case, even though it is a direct investment, such enterprises cannot open direct investment capital accounts and foreign investors cannot transfer the payment 120 Clause Article 36 Law on Enterprises 2014 Tran Quoc Dat, Vu Kim Hanh Dung, “Matrix of capital account” (“Ma trận tài khoản vốn”), http://www.thesaigontimes.vn/156242/a.html, last access on June 23, 2017 122 Clause Article 11 Circular No 19/2014/TT-NHNN 123 See more: Article 22, Article 23 Law on Investment 2014 121 44 3.2.2 Lack of uniformed regulations on adjusting ERC and IRC of enterprises receiving capital contribution According to the current laws, these procedures have not yet clearly defined that whether foreign investors shall initially carry out procedures for capital contribution registration with IRA or implement the capital contribution to enterprises Under the LOE 2014, charter capital is one of four contents of ERC In the event of any changes relating to charter capital, enterprises receiving capital contribution shall conduct procedures for registration of changes to ERC.124 After receiving capital contribution, legal representatives of such enterprises shall register the changes to the ERC within 10 days from the day on which such changes are made Thus, such enterprises are only able to make such changes after investors actually contribute capital to them Nonetheless, regarding Circular No 19/2014/TT-NHNN, investors shall provide commercial banks with IRC, which specifies the duration and the amount of capital contributed.125 Enterprises wishing to receive capital contribution of foreign investors shall conduct procedures for registration of raising capital first and then foreign investors have just been entitled to contribute capital to such enterprises Obviously, there is a conflict between the LOE 2014 and the Circular No 19/2014/TT-NHNN about the time for implementation of capital contribution by foreign investors and the time to carry out procedures for increasing capital of enterprises In fact, when detecting such problem, the DPI of Hai Duong has reported this shortcoming to the competent authorities but there still has not been any change yet.126 In the case at hand, in fact, each bank has different points of view on this issue They guide enterprises according to their understanding, which makes it difficult for foreign investors to make capital contribution due to the fact that provisions of laws have not been applied uniformly 3.3 Remarks With the continuous efforts of the State by continuously promulgating new and more favourable policies and regulations applied to investment of foreign investment, Vietnam’s economy has made many progressive moves which have attracted more foreign investors to invest in Vietnam However, the fact that there still have existed shortcomings somehow has caused some troubles to foreign investors From analysing the above provisions on capital contribution to enterprises 124 See more: Article 29, Article 31 Law on Enterprises 2014 Clause Article Circular No 19/2014/TT-NHNN 126 Minh Anh, “The hardest is to enforce the laws correctly” (“Khó thực thi luật”), http://doanhnhanonline.com.vn/kho-nhat-la-thuc-thi-dung-luat/, last access on June 26, 2017 125 45 of foreign investors of the laws as well as pointing out some difficulties in applying such regulations, the author would like to make some recommendations in order to complete such regulations 3.3.1 Reforming regulations on investment capital accounts According to the State Bank of Vietnam, the purpose of the investment capital accounts is to administer and serve statistical activities for capital inflows and outflows relating to investment activities in Vietnam However, a comparative relationship with difficulties faced by foreign investors and enterprises receiving capital contribution of foreign investors shall be taken into account Therefore, regulations of Ordinance on foreign exchange control 2005 (amended and supplemented in 2013), Circular No 05/2014/TT-NHNN and Circular No 19/2014/TT-NHNN should be amended in accordance with the LOI 2014 and the LOE 2014 on this issue Regarding foreign indirect investment, the law has given its definition that the investment into Vietnam by foreign investors through the purchase and sale of securities, other valuable papers, contribution of capital and purchase of shares, and through securities investment funds, other intermediary and financial institutions in accordance with the law of Vietnam but without direct participation in management of investment activities.127 Thus, the scope of the indirect investment mainly covers issues relating to securities On the other hand, FDI means the transfer of capital for investment and participation in the management of investment activities in Vietnam by foreign investors 128 Additionally, with the abolishment of concepts of direct investment and indirect investment, the LOI 2014 clearly transfers regulations on securities to its specialized law and does not deal with any issues relating to securities.129 Therefore, it should be understood that other cases of foreign investors contributing capital to enterprises rather than activities of capital contribution to enterprises relating to securities shall not be subject to the indirect investment but direct investment and shall be regulated by the LOI 2014 In order to solve the lack of uniformity in the application of regulations on investment capital accounts, the Government should have guidance on this issue for those who apply regulations Specifically, indirect investment capital accounts shall be opened only for the purpose of conducting activities relating to securities Conversely, remaining cases of capital contribution to enterprises, they shall need to transfer money through the direct investment capital accounts opened by foreign direct invested enterprises 127 Clause 13 Article Ordinance on foreign exchange control 2005 (amended and supplemented in 2013) Clause 12 Article Ordinance on foreign exchange control 2005 (amended and supplemented in 2013) 129 Clause Article Law on Investment 2014 128 46 With such uniformity of regulations, the purpose of the two accounts shall be served in the right manner but still be in compliance with all regulations In addition, it will not only help competent agencies to have a consistent understanding of the same content but also help to remove difficulties for foreign investors when transferring money to invest in Vietnam in the form of capital contribution to enterprises 3.3.2 Reforming regulations on adjusting ERC and IRC of enterprises receiving capital contribution Before the Circular No 02/2017/TT-BKHDT took effect, in relation to the coordination of resolving in changes of ERC and IRC, there has not been any specific regulation on which Certificate shall be modified first However, in fact, BRA still applies the Official Letter No 5122/BKHDT-PC of the Ministry of Planning and Investment dated July 24, 2015 on planning for the implementation of the LOI Accordingly, in case investors wishing to amend both IRC and ERC, they are required to implement procedures for amending business registration contents at the BRA so as to be issued the ERC, then, they have to amend investment project contents at the IRA to be issued the IRC.130 As from the Circular No 02/2017/TTBKHDT came into effect, there is cooperation mechanism in case of simultaneous adjustment of IRC and ERC, which is specified in Article of this Circular Therefore, in order to solve the conflict about the time for implementation of capital contribution by foreign investors and the time to carry out procedures for increasing capital of enterprises, the Ministry of Planning and Investment and the State Bank of Vietnam should be quickly promulgated Joint Circular to remove this problem in order for regulations on this issue to be applied uniformly Particularly, when foreign investors submit any document showing that the enterprises have decided to increase their charter capital, they are entitled to transfer the capital to the enterprises' direct investment capital accounts, which will then proceed to the ERC and IRC adjustments Accordingly, at this time, the adjustment IRC only needs to record the additional investment capital has been contributed 130 See more: on Appendix of this thesis 47 CONCLUSION OF CHAPTER In fact, foreign investors investing in Vietnam through the form of capital contribution to enterprises has appeared for a long period Previously, investment procedures in this form were implemented in accordance with the provisions of the LOI 2005, with a number of provisions that were ambiguous However, after the LOI 2014 and the LOE 2014 went into effect, things were different; particularly there were clearer, more transparent regulations on capital contribution to enterprises of foreign capital Accordingly, Mr Su Ngoc Anh, Director of DPI of Ho Chi Minh City, has assumed that: Recently, investment capital in Ho Chi Minh City is moving from the form of 100% foreign capital to capital contribution to enterprises, which shows that foreign investors are choosing the kind of investment that they find reasonable, convenient and effective, without having to carry out procedures such as investment procedures, compensation clearance or building workshops from the beginning of investment.131 However, all reforms are unavoidable obstacles and shortcomings They still not meet the true expectations of the business environment On the basis of a general analysis of the general issues of capital contribution to the enterprises of foreign investors, it can be seen that provisions of the laws and practical application of such regulations still have differences Thus, the above shortcomings should be amended in accordance with the relevant legal provisions and in accordance with the actual situation has been occurring To remove such burdens, barriers, the author has given some remarks as follows: Firstly, regulations on investment capital accounts should be reformed to be applied uniformly Specifically, the Government should have guidance on regulations on investment capital accounts for those who apply them Secondly, the Joint Circular on reforming regulations on adjusting ERC and IRC when enterprises receiving capital contribution of foreign investors should be quickly promulgated to solve the conflict of law on this problem As a result, to step by step remove these shortcomings will shorten the investment gap of foreign investors into Vietnam market; simultaneously create trust for foreign investors in the Vietnamese legal system, thereby attracting more and more foreign investment into Vietnam Nguyen Duc, “Foreign investors tend to invest in the form of capital contribution and purchase of shares” (“Nhà đầu tư ngoại đổ tiền góp vốn, mua cổ phần”), http://www.baomoi.com/nha-dau-tu-ngoai-do-tien-gopvon-mua-co-phan/c/21673073.epi, last access on June 27, 2017 131 48 CONCLUSION The LOI 2014 and the LOE 2014 are regarded as positive reforms in comparison with the LOI 2005 and the LOE 2005 relating to issues of establishment of and capital contribution to enterprises of foreign investors, which are expected to attract more foreign investment to Vietnam to boost the business environment Especially, in the context when Vietnam has joined the WTO as well as signing partnership agreements like TPP, FTA, favourable conditions for foreign investors to invest in Vietnam shall be taken into account However, all reforms are unavoidable obstacles and shortcomings Particularly, according to Dr Claudio Dordi, Head of the Foreign Consultants Team of the European Trade Policy and Investment Support Project (EU-MUTRAP), which is an organization helping Vietnam to integrate further into the global commerce; the implementation of the LOI 2014 is having some problems, which are affecting both domestic enterprises and attraction of foreign investment.132 Therefore, it is necessary in the coming time to take steps to amend and supplement through the research and summarize the assessments from business practices so that these two laws really meet the demand for the business environment, which is more transparent and efficient With the desire to create more legal bases for investment of foreign investors in Vietnam, especially in the forms of establishment of and capital contribution to enterprises, the author has tried to clarify relevant legal issues as follows: Initially, the author has introduced the concept of foreign investor as well as presented basically four forms of investment in Vietnam Additionally, the author has pointed out the practical role of investment into enterprises in relation to foreign investors to emphasize the importance of foreign investment in enterprises Also, the author has also mentioned about the prerequisites applied to foreign investors when they conduct investment in Vietnam Then, the author has analysed the general provisions of laws relating to the establishment of and capital contribution to enterprises of foreign investors Based on that analysis along with experts’ comments as well as feedbacks by investors who are struggling on these issues, the author were able to point out some shortcomings of the laws in such regulations Thereby, the author has made some recommendations to contribute to improve such regulations in particular and Vietnam’s legal system in general Regarding establishment of enterprises of foreign investors, procedures for establishment of enterprises are one of the keys to boost the economy, improve the Manh Thuong (2016), “Get rid of foreign investors troubles” (“Gỡ khó cho nhà đầu tư”), Nhip cau dau tu Magazine, Volume 477/2016, p 132 49 domestic business environment and attract foreign investment Therefore, if such procedures are carried out in accordance with the law, which is more simple and clearer, it will create confidence for foreign investors when investing in this form To achieve so, the Government first needs to promulgate guiding documents and solve the lack of respectfulness to time limitation for issuance of IRC and ERC In addition, the Government should promulgate guiding documents to solve the overlaps of regulations as well as to help the laws to be more transparent and clearer Especially, some legal procedures are still cumbersome and not really necessary, thus, in order to attract more foreign investment, dossiers as well as administrative procedures relating to establishment of enterprises of foreign investors should be kept on improving, simplifying and clarifying Regarding capital contribution to enterprises of foreign investors, regulations on this issue should be clarified to make it more transparent Particularly, regulations on investment capital accounts should be taken into account in case of amendment and supplement of regulations on capital contribution in order for the laws to be applied uniformly Simultaneously, the time of implementation capital contribution and the time of registration of capital contribution should be adjusted so that the capital contribution of foreign investors is able to be carried out seamlessly Within the limitation of the author’s ability as well as the limitation of numbers of pages of this thesis, the author has only just analysed the problem at the most basic level and gave recommendations only at the individual of the author based on experts’ comments as well as feedbacks of investors, which have not been studied specifically and deeply Nevertheless, the author hopes that the these analysis will contribute to the improvement of the laws in order to quickly bring Vietnam’s economy closer to the global economy as well as to promote the attraction of foreign investment into Vietnam Accordingly, investment in the forms of establishment of and capital contribution to enterprises is no longer considered as a barrier for foreign investors but still guarantees the efficiency of Vietnam's economy 50 BIBLIOGRAPHY A Legal documents Vietnamese regulations Civil Code (Law No 91/2015/QH13) dated November 24, 2015 Law on Investment (Law No 67/2014/QH13) dated November 26, Law on Enterprises (Law No 68/2014/QH13) dated November 26, Law on Investment (Law No 59/2005/QH13) dated November 29, Law on Enterprises (Law No 60/2005/QH13) dated November 29, Law on Amendment and supplement to Article and Appendix on 2014 2014 2005 2005 the list of conditional business lines stipulated in the Law on Investment (Law No 03/2016/QH14) dated November 22, 2016 Law on Vietnamese nationality (Law No 24/2008/QH12) dated November 13, 2008 Law on amending and supplementing a number of articles of the Law on Vietnamese nationality (Law No 56/2014/QH13) dated June 24, 2014 Law on Environmental protection (Law No 55/2014/QH13) dated June 23, 2014 10 Ordinance No 28/2008/PL-UBTVQH11 of the Standing committee of National Assembly dated December 13, 2005 on foreign exchange control 11 Ordinance No 06/2013/UBTVQH13 of the Standing committee of National Assembly dated March 18, 2013 on amending and supplementing a number of articles of the ordinance on foreign exchange control 12 Decree No 118/2015/ND-CP of the Government dated November 12, 2015 on guidelines for some articles of the Law on Investment 13 Decree No 78/2015/ND-CP of the Government dated September 14, 2015 on Enterprise registration 14 Decree No 43/2010/ND-CP of the Government dated April 15, 2010 on Enterprise registration 15 Decree No 23/2007/ND-CP of the Government dated February 12, 2007 on detailing the commercial law regarding goods purchase and sale activities or goods purchase and sale related activities of foreign-invested enterprises in Vietnam 16 Decree No 73/2012/ND-CP of the Government dated September 26, 2012 on the foreign cooperation and investment in education 17 Decision No 88/2009/QD-TTg of the Prime Minister dated June 18, 2009 on Promulgating the regulation on foreign investors’ contribution of capital to, and purchase of shares from, Vietnamese enterprises 18 Circular No 131/2010/TT-BTC of the Ministry of Finance dated September 06, 2010 guiding the regulation on foreign investors contribution of capital to, and purchase of shares from, Vietnamese enterprises 19 Circular No 05/2014/TT-NHNN of the State Bank of Vietnam dated March 12, 2014 on guiding the opening and use of indirect investment capital accounts for implementation of foreign indirect investment activities in Vietnam 20 Circular No 19/2014/TT-NHNN of the State Bank of Vietnam dated August 11, 2014 on guiding the foreign exchange management for the FDI in Vietnam 21 Circular No 02/2017/TT-BKHDT of the Ministry of Planning and Investment dated April 18, 2017 on guiding the mechanism for cooperation in processing of applications for investment registration and enterprise registration submitted by foreign investors Foreign regulations 22 The Law of the People’s Republic of China on Wholly ForeignOwned Enterprises passed by the Standing Committee of the National People’s Congress on September 3, 2016 23 The Law on Investment Promotion of Lao People’s Democratic Republic dated July 8, 2009 24 The Companies Act of Singapore dated December 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http://tapchitaichinh.vn/kinh-te-vi-mo/kinh-te-dau-tu/ngan-hang-the-gioi-lac-quanve-phat-trien-kinh-te-viet-nam-106924.html APPENDIX ... on establishment of and capital contribution to enterprises of foreign investors 1.2.2 Practical role of investment into enterprises in relation to foreign investors The attraction of foreign capital. .. applied to define the legal status of foreign investors, the holding rates of foreign investors in enterprises is regarded as one of the criteria to define the legal status of foreign investors. .. addressing ? ?Establishment of or capital contribution to enterprises of foreign investors under Vietnamese regulations? ?? Secondly, issues of ? ?establishment of and capital contribution to enterprises of