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/TT- BKHDT came into effect, there is cooperation mechanism in case of simultaneous adjustment of IRC and ERC, which is specified in Article 8 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
48
CONCLUSION OF CHAPTER 3
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 do 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.
131 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-gop- von-mua-co-phan/c/21673073.epi, last access on June 27, 2017
49
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
132 Manh Thuong (2016), “Get rid of foreign investors troubles” (“Gỡ khó cho nhà đầu tư”), Nhip cau dau tu Magazine, Volume 477/2016, p. 8
50
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.
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