Is it illegal for suspension of an investment project for a total of 20 months? If so, how is it handled?
When is suspension of investment projects?
Pursuant to Article 47 of the Law on Investment 2020 of Vietnam on suspension of investment projects:
- When suspending an investment project, the investor must notify the investment registration authority in writing. If the project has to be suspended in a force majeure event, the State shall allow the investor to be exempt from paying land rents or reduce land levies for the suspension period with a view to remedy consequences caused by the force majeure event.
- The investment authority shall decide to suspend an investment project in part or in full in the following cases:
+ To protect sites/monuments, relics, antiques or national treasures in accordance with the Law on Cultural Heritage;
+ To rectify a violation of the law on environmental protection at the request of the environment authority;
+ To take measures to ensure occupational safety at the request of the labor authority;
+ Pursuant to a judgment or decision of a court or an arbitral award;
+ The investor fails to adhere to the written approval for investment guidelines or the investment registration certificate and recommits administrative violations after incurring penalties.
- The Prime Minister shall decide to suspend a project in part or in full if the project execution is detrimental or potentially detrimental to national defense and security at the request of the Ministry of Planning and Investment.
- The Government shall elaborate conditions, procedures and time limit for suspending investment projects in accordance with this Article.
Investment project
Is it illegal for suspension of an investment project for a total of 20 months?
Pursuant to Article 56 of Decree 31/2021/ND-CP of Vietnam on the period and procedures for suspension of investment projects:
- An investment project shall be suspended in the cases specified in Clauses 1, 2 and 3 Article 47 of the Law on Investment.
- The total period of suspension of an investment project shall not exceed 12 months. If the investment project is suspended according to a court’s effective judgment or decision, effective arbitral award or investment authority’s decision, the suspension period shall be determined according to the court’s judgment or decision, effective arbitral award or investment authority’s decision. If these documents do not specify the suspension period, the total suspension period shall not exceed the period prescribed in this Clause.
- Suspension procedures are as follows:
+ If the investor decides to suspend the investment project himself/herself/itself as prescribed in Clause 1 Article 47 of the Law on Investment, such investor shall send a notification to the investment registration authority within 05 working days from the date of making the decision. The investment registration authority shall receive the notification and notify the project suspension to relevant authorities;
+ If the investment authority decides to suspend the investment project, such authority shall, according to the competent authorities’ opinions about the cases specified in Clause 2 Article 47 of the Law on Investment to decide to suspend part or whole of the investment project and notify relevant authorities and investor. The investment authority or competent authorities in the fields specified in Points a, b, c and dd Clause 2 Article 47 of the Law on Investment shall make a record prior to deciding to suspend or suspend part of the investment project. Where the investment project is suspended according to the court’s judgment or decision or arbitral award, the investment authority shall, according to the court’s effective judgment or decision or effective arbitral award, decide to suspend part or whole of the investment project;
+ Regarding an investment project that is detrimental or potentially detrimental to the national defense and security, the provincial People’s Committee shall send a written notification to the Ministry of Planning and Investment. The notification shall contain the following contents: the investor executing the project; objectives, locations and contents of the project, process of executing the project; assessment of impacts or potential impacts of the project on national defense and security; proposal that part or whole of the project is suspended. At the request of the provincial People's Committee, the Ministry of Planning and Investment shall seek opinions of the Ministry of National Defense and Ministry of Public Security for submission thereof to the Prime Minister for decision to suspend part or whole of the project.
Thus, the total period of suspension of an investment project shall not exceed 12 months. If the investment project is suspended according to a court’s effective judgment or decision, effective arbitral award or investment authority’s decision, the suspension period shall be determined according to the court’s judgment or decision, effective arbitral award or investment authority’s decision.
Therefore, suspension of an investment project for 20 months without having to comply with a court’s effective judgment or decision, effective arbitral award or investment authority’s decision is a violation of the law.
If an investment project of the company is suspended for more than 12 months, how will the company be handled?
Pursuant to Article 19 of Decree 122/2021/ND-CP of Vietnam on handling of violations in the implementation of investment projects is prescribed as follows:
- A fine ranging from VND 50,000,000 to VND 70,000,000 shall be imposed for any of the following violations:
+ Failure to pay a deposit or obtain a bank guarantee for deposit payment obligation for execution of an investment project that requests the State to allocate or lease out land or grant permission for land repurposing unless otherwise prescribed by law;
+ Failure to follow procedures for guaranteeing of execution of an investment project on prescribed schedule;
+ Increasing the investment capital of a project without paying an additional amount of deposit or credit institution’s deposit payment guarantee when requested in writing by the investment authority;
+ Making an unlawful, untruthful, inaccurate application for reduction in the costs of guarantee for project execution.
- A fine ranging from VND 70,000,000 to VND 100,000,000 shall be imposed for any of the following violations:
+ Failure to correctly comply with the written approval for investment guidelines, written approval for both investment guideline adjustment and investor change, written approval for investor or investment registration certificate;
+ Failure to follow the procedures for liquidating the investment or project and discharge financial obligations to the State as prescribed by law;
+ Suspending an investment project for a total period of more than 12 months.
- A fine ranging from VND 100,000,000 to VND 200,000,000 shall be imposed for any of the following violations:
+ Executing the project before being granted the investment registration certificate or approval for investment guidelines, approval for both investment guideline adjustment and investor change or investor approval;
+ Failure to suspend the investment project after the competent authority decides to suspend the investment project or suspend it in part or in full.
- Remedial measures:
The violator is compelled to:
+ pay an additional amount according to regulations of law if the violation specified in Point c Clause 1 of this Article is committed;
+ Return the illegal benefits obtained from making the unlawful, untruthful, inaccurate application if the violation specified in Point d Clause 1 of this Article is committed;
+ follow procedures for liquidating the investment project and discharging financial obligations if the violation specified in Point b Clause 2 of this Article is committed;
+ continue to execute the investment project according to the schedule on the investment registration certificate, written approval for investment guidelines and written approval for both investment guideline adjustment and investor change or terminate the investment project if the violation specified in Point c Clause 2 of this Article is committed written;
+ apply for the investment registration certificate, approval for both investment guideline adjustment and investor change or investor approval if the violation specified in Point a Clause 3 of this Article is committed.
Thus, suspension of an investment project for a total period exceeding 12 months shall result in a fine ranging from VND 70,000,000 to VND 100,000,000. In addition, the investor must also apply the remedial measure, which is to force to continue to execute the investment project according to the schedule on the investment registration certificate, written approval for investment guidelines and written approval for both investment guideline adjustment and investor change or terminate the investment project.
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