When registering to establish an investment project, the Investor must register with the competent state authorities the main elements, such as: Name, implementation place, land area used, sector, scale, investment capital, project duration, and schedule of investment project execution. Furthermore, elements such as incentives, investment support and conditions for investors to implement the investment project. All these contents will be recorded on the Investment Registration Certificate.
In particular, the implementation progress of investment projects is one of the elements that needs the investor’s special attention. This is because in the process of implementing the project, investors cannot avoid unexpected issues arising in the due course of their plans and schedules. The Covid-19 pandemic has not only proven this but also made many projects unable to implement as scheduled. In such a case, the investor must carry out the procedure for requesting to reschedule the investment project. However, with the changes in the law on investment, specifically, the ‘Law on Investment, 2020’, which took effect, the regulation on extending the progress of implementing investment projects has been abolished.
1. Extension of the investment progress in accordance with the Law on Investment (2014)
The Investors were entitled to extend the investment progress schedule by a total time not exceeding 24 months (except in case of force majeure, where the time to overcome the force majeure consequences is not included in the time of extension of the investment progress). If investors need to extend the progress schedule of the investment project, they must propose in writing to the investment registration agency that they wish to extend the progress schedule of investment capital, construction progress schedule and put the main construction into operation (if any) and extend the progress schedule of implementing the operational objectives of investment projects. Specifically, the following aspects must be noted:
- Subjects allowed to reschedule an investment project: The project that can be rescheduled is a project that has been granted an Investment Registration Certificate or a project with an Investment Policy Decision.
- Proposed contents of investment progress extension:
- The operational status of the investment project and the fulfilment of financial obligations to the State from the time of being granted the ‘Investment Registration Certificate’ or the Investment Policy Decision (or “Investment Policy Approval”) to the time of extending the progress schedule of such project.
- Explanation of reasons for extending the duration of the project implementation.
- Plan of continuation of implementation schedule of the project, including the capital contribution plan, basic construction progress and the plan of putting the project into operation.
- The commitment of the investor to continue project implementation.
- Procedure: The Investor prepares and submits the applications at the investment registration agency. Within 15 days from the date of receipt of the applications, the investment registration agency will give its written opinion on the rescheduling of the investment project.
2. Under the ‘Law on Investment 2020’, the regulation for rescheduling the investment progress has been abolished
Accordingly, under the ‘Law on Investment, 2020’, during the implementation of the investment project, the investor has the right to: Adjust the objectives, transfer part or the whole of an investment project, merge or divide projects, or split one project into several projects, use of land use rights, assets on land belonging to the investment projects to contribute capital to the establishment of enterprises, business cooperation or other provisions and must comply with the legal provisions. However, it no longer includes the right to extend the progress schedule of the investment project.
However, the provisions for rescheduling an investment project are still prescribed in several other articles of the new Law on Investment. Precisely, the projects allowed for an extension of the schedule of have been narrowed, and only the investment projects which have been approved for investment policy are allowed for extension. Here, the investor shall carry out the procedures for approval of the adjustment of investment policies when the total project investment period is delayed by 12 to 24 months in comparison to the original execution schedule in the first investment policy approval document.
Thus, according to the provisions of the Law on Investment (2020), we understand that normal investors, who are not in the category of those applying for investment policy approval, cannot prolong the investment project progress schedule.
3. Issues arising
According to the above analysis, in case the investor operating under the project is not subject to investment policy approval, the problem arises when the project cannot be done on schedule, as promised originally. Investors are also no longer able to extend capital contribution progress, which was allowed under the old Law on Investment. For such investors falling into this category, in addition to the solution of transferring part or the whole of the project to another investor for speeding up the project implementation schedule, is there any other solution to deal with the delay in accordance with the provisions of the Investment Law (2020) and meeting the requirements of investors’ operations?
The Law on Investment (2020) specifies that the Investors can self-suspend an investment project for a maximum of 12 months and must notify the investment registration agency about such self-suspension in writing. In this case, the investor shall send a notice to the investment registration agency within 5 working days from the date of issuance of the above decision. The investment registration agency will receive and notify the cessation of the investment project to the concerned agencies.
Thus, with this provision, investors can suspend the project’s operation for a period of 12 months to be able to handle problems that arise in the due course of its implementation. This gives the investors more time to prepare for the operation according to the schedule which the investor has originally committed to, giving more time to implement when registering the establishment of the investment project.
In fact, Vietnam currently has many projects with slow progress due to many reasons. The state agencies are increasingly tightening these projects. Therefore, investors need to understand the legal provisions and consider the correct implementation of the investment project schedule to avoid violation of the committed project schedule and being subjected to sanctions by state agencies.
The above are some regulations and provisions on the rescheduling of the progress schedule of investment projects under the ‘Law on Investment, 2020’.