VietNamNet Bridge – Bui Quang Vinh, Minister of Planning and Investmentthinks he knows how to streamline Vietnam's complex foreign investment process: eliminate the investment certificate mechanism.Foreign investors, however, are not so sanguine about the idea.

The government is seeking the National Assembly’s ratification of its proposal not to grant investment certificates to all investment projects but some specific ones.

In a document submitted to the Assembly, the government explained that the proposal is part of its ongoing effort to reform the investment process, with the aim of simplifying administrative procedures.

Obtaining both an investment license and investment certificate has been compulsory for all foreign investors in Vietnam since the nation began opening its doors to them in 1987.

Vinh believes that granting investment certificates is no longer necessary, as current law clearly states the requirements on investors. The investment certificate mechanism, as it stands today, imposes an unnecessary burden on investors, forcing them to jump through various procedural hoops.

All agree that the implementation of foreign-invested projects in Vietnam takes too much time. After citing some examples, Vinh came to the conclusion that the investment certificate mechanism is a major factor behind the investment process delays. Investors have frequently complained about the long wait for the certificates.

Two years ago, in March 2012, the Japanese company JFE Steel announced that it bought a large share of Taiwan’s E-United Steel, which was invested in a steel project in the Dung Quat Economic Zone in Quang Ngai province.

While the deal was wrapped up [long ago], the new investor still has not got the investment certificate it needs for the project. And Vinh says JFE Steel is not alone.

Contrary to policy makers’ expectations, foreign investors are not all welcoming the plan to eliminate the investment certificate process.

“I know many investors who do not believe the removal of the mechanism will do them any good,” said Nguyen Mai, Chair of the Foreign Invested Enterprises’ Association in Vietnam.

Mai said investment certificate is considered a useful document for investors to follow the necessary steps to implement their projects, including ones to get land allocated.

Nguyen Cong Ai, Deputy General Director of KPMG, a foreign-invested auditing and finance consultancy firm in Vietnam, noted that foreign investors consider the investment certificate as something of an “amulet” they can wear when working with Vietnamese state bodies such as customs or tax agencies.

An investment certificate demonstrates an investor’s commitment to a project’s implementation. It also can serve as evidence of commitments on tax or land incentives the government makes to investors.

“They (investors) fear that if Vietnam changes its policies, they will not be able to enjoy the promised incentives. Therefore, they want to keep investment certificates to show as proof when necessary,” Ai commented, explaining that all the investment incentives are written down in the certificates.

Mai also warned that the elimination of investment certificates would reduce the efficiency of state management, especially in localities where officials’ management capabilities are limited. He also said that in most cases, it is simple and not time consuming to register investment projects at management agencies.

NCDT