Vietnam: Annulling 01 case that investors are not required to guarantee for execution of investment projects from 2021

According to Article 43 of the Law on Investment 2020 of Vietnam, 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 04 following cases:

- 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;

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

- 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;

- 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.

Note: 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.

Currently, according to Article 42 of the Law on Investment 2014, guided by Article 27 of Decree No. 118/2015/NĐ-CP of Vietnam’s Government, the investor must pay a deposit when receiving land, leasing land, or permitted to repurpose land by the State to execute the investment project, except for the 05 following cases:

- The investor is the successful bidder for land use right to execute the investment project and receives levied land from the State or leases land from the State and pay a lump sum rent for the entire lease term;

- The investor is a successful bidder for an investment project using land according to regulations of law on bidding;

- The investor receives land or lease land from the State on the basis of transfer of an investment project has paid the deposit of completely contributed capital and/or raised capital according to the schedule specified in the Investment Registration Certificate or decision on investment guidelines;

- The investor receives land or leases land from the State to execute an investment project on the basis of receipt of land use right or property on land of another land user;

- The investor is a revenue-earning public service agency, a hi-tech zone development company established under a decision of a competent authority to execute investment projects that receive land or lease land from the State to develop infrastructure of industrial parks, export-processing zones, hi-tech zones, specialized areas in economic zones.

Thus, according to the above provisions, it can be seen that the Law on Investment 2020 of Vietnam annulled 01 case that investors are not required to pay deposit to guarantee for execution of investment projects compared to current regulations. Thus, from January 01, 2021, there are only 04 cases that investors are not required to guarantee for execution of investment projects, concurrently, the investor which is a revenue-earning public service agency, a hi-tech zone development company established under a decision of a competent authority to execute investment projects that receive land or lease land from the State to develop infrastructure of industrial parks, export-processing zones, hi-tech zones, specialized areas in economic zones must guarantee for execution of investment projects.

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Ty Na

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