What is duration of investment projects inside economic zones in Vietnam? Is it possible to extend the operation of investment projects in Vietnam?

What is duration of investment projects inside economic zones in Vietnam?

Pursuant to Article 44 of the Investment Law 2020, there are regulations on duration of investment projects as follows:

1. The duration of an investment project inside an economic zone shall not exceed 70 years.

2. The duration of an investment project outside an economic zone shall not exceed 50 years. The duration of an investment project in a disadvantaged area or extremely disadvantaged area or a project with large investment capital but with slow rate of capital recovery may be longer but shall not exceed 70 years.

3. If an investment project uses land allocated or leased out by the State, but the transfer of land is delayed, the delay shall not be included in the project duration or execution schedule.

4. Upon expiry of the duration of an investment project, if the investor wishes to keep executing the investment project and satisfies the conditions as prescribed by law, the duration of the investment project may be extended but shall not exceed the maximum prescribed in Clauses 1 and 2 of this Article, except for the following investment projects:

a) Investment projects using obsolete, environment threatening or resource-intensive technologies;

b) Investment projects in which the investor must transfer assets without reimbursement to the State of Vietnam or the Vietnamese side.

5. The Government shall elaborate this Article.

Thus, the maximum duration of investment projects in the economic zone in which your business intends to invest is not exceed 70 years in Vietnam.

Is it possible to extend the operation of investment projects in Vietnam?

Pursuant to Article 27 of Decree 31/2021/ND-CP has the following provisions:

1. The duration of an investment project specified in Clauses 1 and 2 Article 44 of the Law on Investment begins from the date on which the investor is issued with the decision on investor approval, decision on approval for both investment guidelines and investor or the investment registration certificate for the first time. For the investment project which uses land allocated or leased out by the State or is permitted by the State to repurpose land, its duration begins from the date on which the investor is issued with the decision on land allocation, decision on land lease or decision on land repurposing. If the investor has obtained the decision on land allocation, decision on land lease or decision on land repurposing but the transfer of land is delayed, the duration of the investment project begins from the date on which land is transferred on site.

2. During the execution of the investment project, the investor is entitled to extend or shorten its duration. The adjusted duration shall not exceed the duration specified in Clauses 1 and 2 Article 44 of the Law on Investment.

3. According to the objectives, scale, location and operating requirements of the investment project, the authority that has the power to approve investment guidelines and the investment registration authority shall consider and decide the duration, and adjust duration of the investment project as prescribed in Clauses 1 and 2 of this Article.

4. Except for the regulations in Points a and b Clause 4 Article 44 of the Law on Investment, upon expiry of the duration of an investment project, the authority that has the power to approve investment guidelines and the investment registration authority will consider and decide to extend duration of such project if the investor wishes to keep executing the investment project and satisfies the following conditions:

a) The project conforms to the national planning, regional planning, provincial planning, urban planning and special administrative-economic unit planning (if any); conforms to the objectives and orientations for urban development or residential housing development plans and programs (with respect to projects on investment in residential housing and urban area construction);

b) The conditions for land allocation or land lease prescribed by the law on land are met (in the case of applying for extension of land use term).

5. The period of extension of duration of the project specified in Clause 4 of this Article shall be considered on the basis of objectives, scale, location and operating requirement of the project and shall not exceed the maximum duration mentioned in Clauses 1 and 2 Article 44 of the Law on Investment.

6. If the investment project satisfies the condition prescribed in Point b Clause 4 of this Article but fails to satisfy the condition prescribed in Point a Clause 4 of this Article, the authority that has the power to approve investment guidelines and the investment registration authority shall consider extending its duration on a year-by-year basis until the district’s annual land use plan is available in accordance with regulations of law on land. The investor shall only follow procedures for extending the duration for the first year of extension.

7. The duration of an investment project with a commitment to transfer the investor’s assets without reimbursement to the State of Vietnam or to a Vietnamese party after the expiry of the duration shall be determined as prescribed in Clause 3 Article 124 hereof.

8. The land-related financial obligation discharged to the State in the case of adjustment or extension of duration of an investment project shall be determined in accordance with regulations of law on land and relevant regulations of law.

9. Procedures for adjusting and extending duration of investment projects are specified in Article 55 hereof.

10. Investment projects using obsolete, environment threatening or resource-intensive which do not have their duration adjusted and extended as prescribed in Point a Clause 4 Article 44 of the Law on Investment include:

a) Projects using a technological line which, upon its operation, fails to meet the provisions of National technical regulations on safety, energy saving and environmental protection; or the capacity (which is the number of products that the technological line produce in a given time period) or the remaining performance of the technological line is less than 85% of the design capacity or performance; or the amount of raw materials, materials or energy consumed by the technological line exceeds 15% of its design consumption level.

In case of unavailability of National Technical Regulations on safety, energy saving and environmental protection related to the projects’ technological line, only technical indicators of Vietnam’s Standards or National Standards of one of the G7 countries or Korea with regard to safety, energy saving, and environmental protection shall be applied;

b) Projects using machinery and equipment for production with HS codes in Chapters 84 and 85 of Vietnam’s nomenclature of exports and imports which have a useful life of more than 10 years or which, upon their operation, fail to satisfy the provision of National technical regulations on safety, energy saving and environmental protection. In case of unavailability of National Technical Regulations on safety, energy saving and environmental protection related to the projects’ machinery and equipment, only technical indicators of Vietnam’s Standards or National Standards of one of the G7 countries or Korea with regard to safety, energy saving, and environmental protection shall be applied.

The Ministry of Science and Technology shall provide guidelines for determining machinery and equipment in some fields which have a useful life of more than 10 years but are not classified as obsolete, environment threatening or resource-intensive technologies.

11. The determination of whether an investment project uses obsolete, environment threatening or resource-intensive technologies as prescribed in Clause 10 of this Article shall be carried out as follows:

a) The Ministry of Science and Technology shall preside over and cooperate with relevant authorities in determining technologies of investment projects subject to approval for their investment guidelines by the National Assembly and the Prime Minister;

b) Science and technology authorities affiliated to provincial People’s Committees shall preside over and cooperate with relevant authorities in determining technologies of investment projects other than those specified in Point a of this Clause;

c) Funding for determination shall be covered by the state budget. If the duration of the investment project continue to be extended, the investor shall pay all costs of determination;

d) Applications and procedures for determination of investment projects using obsolete, environment threatening or resource-intensive technologies shall comply with the Prime Minister’s regulations.

According to this Article, your company can extend duration of investment projects in Vietnam. However, the duration of the investment project shall not exceed 70 years.

Best Regards!