Does investor that is the successful bidder for the right to use a land area have to pay a deposit for investment project execution in Vietnam?

Does investor that is the successful bidder for the right to use a land area have to pay a deposit for investment project execution in Vietnam?

Article 43 of the Investment Law 2020 provides for guarantee for execution of investment projects, specifically as follows:

1. The investor shall pay a deposit or have a bank guarantee for investment project execution if the project uses land allocated or leased out by the State or is permitted by the State to repurpose land, except for the following cases:

a) The investor is the successful bidder for the right to use a land area that is allocated by the State for land levy or leased out by the State for a lump-sum rent;

b) The investor wins bidding for execution of an investment project using land;

c) The State allocates or leases out land to the investor on the basis of receipt of an investment project for which a deposit has already been paid or for which the capital has been fully contributed or raised following the schedule specified in the written approval for investment guidelines or the investment registration certificate;

d) The State allocates or leases out land to the investor for execution of an investment project on the basis of receipt of the land use right and assets on land from another land user.

2. Based on the scale, nature and execution schedule of each investment project, the deposit for assurance of project execution is 01% - 03% of the investment capital of the project. If a project comprises multiple investment phases, the amount of deposit shall be paid and returned in each phase of execution of the investment project, except for the case in which the deposit is not returned.

3. The Government shall elaborate this Article.

According to this Article, if you are an investor who participates in the auction and are successful bidder for the right to use a land area to implement an investment project that is allocated land by the State with land use levy, you must make a deposit to secure the investment project execution in Vietnam.

Are investors allowed to self-determine the value of the investment capital of investment projects in Vietnam?

According to Article 45 of the Law on Investment 2020, determination of value of investment capital; assessment of value of investment capital; assessment of machinery, equipment and technological lines, according to which:

1. Every investor shall ensure the quality of machinery, equipment and technological lines for execution of investment projects in accordance with regulations of law.

2. The investor shall self-determine the value of the investment capital of the investment project after the project is put into operation.

3. Where necessary, to ensure state management of science and technology or to form a basis for tax calculation, the competent authority has the power to require independent assessment of the value of the investment capital, quality and value of machinery, equipment and technological lines after the investment project is put into operation.

4. The investor must bear any expenses for assessment if the assessment results lead to an increase in the tax obligations discharged to the State.

5. The Government shall elaborate this Article.

With this regulation in Vietnam, after the investment project is put into operation, you as an investor can self-determine the value of the investment capital of the investment project.

What are conditions for investors to transfer whole of the investment project to another investors in Vietnam?

Pursuant to Clause 1, Article 46 of the Investment Law 2020 stipulates transfer of investment projects, specifically as follows:

1. An investor is entitled to transfer part or whole of the investment project to another investor when the following conditions are satisfied:

a) The investment project or the part of the investment project which is transferred has not been terminated in accordance with Clauses 1 and 2 Article 48 of this Law;

b) The foreign investor receiving the investment project or part of the investment project must satisfy the conditions set out in Clause 2 Article 24 of this Law;

c) The conditions set forth the law on land are complied with if the transfer of an investment project is associated with transfer of the land use rights/assets on land;

d) The conditions set forth in the laws on residential housing and on real estate business are complied with in the case of transfer of a residential housing construction project or real estate project are complied with;

dd) The conditions set forth in the written approval for investment guidelines or the investment registration certificate or in accordance with other relevant regulations of law (if any) are complied with;

e) Upon transfer of an investment project, in addition to compliance with this Article, the state-owned enterprise shall comply with the Law on Management and Use of State Capital Invested in Manufacturing and Business Activities of Enterprises before making any adjustment to the investment project.

Thus, an investor has the right to transfer whole of investment project to another investor when meeting the above conditions as prescribed in Vietnam.

Best Regards!