The Investment Law was drafted to protect the rights and benefits of investors and encourage investment in Vietnam, but experts say it has failed to do so, and some even argue it has made things far worse.
The law "worsens the business environment in Vietnam" with its unclear and contradictory regulations, said Cao Ba Khoat, director of Hanoi-based K & Associates Co. It overlaps with other laws, "messing everything up," he said.
Khoat's statements published by Thoi bao Kinh te Saigon (Saigon Economic Times) Magazine last week echoed several reports on the law since it came into effect in June 2006.
A report by the Business Information Center at the Vietnam Chamber of Commerce said in 2008 that ambiguities in the law had been easily exposed, as well as "inconsistencies and conflicts" with other business-related laws, including the Land Law, the Environmental Law, and the Construction Law.
According to the Task Force for Implementing the Enterprise Law and Investment Law, headed by the Ministry of Planning and Investment, investors and government agencies have faced extreme difficulties in implementing the Investment Law.
In some cases, if officials assessed an investment proposal based on environmental codes in the Investment Law, certain regulations under the Environment Law would be violated. As a result, "most localities chose to "˜violate' the Environment Law," the Task Force said.
"One of its main goals is to adjust the governance of investment, but the Investment Law has not really succeeded in that role," said a member of the Task Force who wished to remain unnamed.
The member said a glaring example was that though everyone agreed that it is necessary to restrict the number of similar projects located near each other to prevent capital waste and unnecessary competition, the Investment Law had failed to do so.
The Investment Law stipulates that local projects with an investment of VND15 billion or more, and all foreign invested projects, have to obtain an investment license from provincial authorities. But this has proved easier said than done for many investors.
The International Finance Corporation, the private sector arm of the World Bank Group, reported that investors in an unidentified province have to visit government agencies 38 times, submit 67 documents and wait 451 days on average to receive a project license.
Many lawyers have said that ambiguous regulations under the Investment Law have resulted in different interpretations by licensing agencies, requiring them to seek instructions from higher authorities, hence delays in the process. They said many foreign investors had to wait for years to receive licenses, especially in the distribution and property sectors.
"As the law is vague, some cases were decided without any (legal) basis," a lawyer said, noting that sometimes an investor was rejected simply because authorities deemed the project in a sector that "doesn't need to be encouraged."
Khoat said investment-related issues including construction, land use, and environmental protection, can be monitored by their corresponding laws. "The Investment Law is thus pointless and it even overlaps with other laws," he said.
The expert from the task force said that although it's necessary for the government to administer investment, it doesn't mean there has to be an investment law. "Many other countries have good investment management without such a law."
"The government should only monitor what they have to, and other things that belong to businesses should not be interfered with," the task force member said.