New guidance on investment supervision and evaluation for foreign investment activities in Vietnam

On 14 February 2022, Vietnam’s Ministry of Planning and Investment enacted Circular No. 02/2022/TT-BKHDT guiding the investment supervision and evaluation for foreign investment activities in Vietnam (“Circular 02”), which will be effective from 01 April 2022. We will discuss the following key points:

Foreign investment activities-related State management authorities, investment registration authorities, authorities functioning in the state management on investment, foreign-invested economic organizations (the “FIEs”), and projects which are operating in Vietnam shall be Circular 02’s applicable subject matter. Legally speaking, Circular 02 provides the principles for foreign investment management, one of which is not to prevent or affect the normal operations of the FIEs during the process of supervision and evaluation of investment.

Supervisions and evaluations according to Circular are implemented in the following two (2) methods: (i) regular; and (ii) irregular based on a particular topic or decision. If the irregular supervision relies on a particular topic/decision, the FIEs shall be notified of the inspection details and shall receive a written inspection report from the inspecting authority, including the FIEs’ advantages, shortcomings, disadvantages (if any), and essential requirements.

The detailed scope of supervision of the FIEs includes, among others:

• the progress of charter capital contribution and disbursement of registered investment capital; total investment capital used and its ratio to total registered investment capital;
• the progress of project development;
• the implementation of the project’s investment objectives;
• the application of technology to projects subject to appraisal and opinions on technology;
• technology transfer;
• the implementation of commitments and satisfying investment conditions, market access conditions, conditions to enjoy investment incentives;
• the implementation of financial obligations towards the State;
• in compliance with legislation on labor, foreign exchange control, environment, land, construction, fire prevention, and fighting, and other specialized legislations;
• the FIEs’s financial situation; and
• other contents related to the implementation of investment projects.

Circular 02 alternatively clarifies the scope of the state authorities’ power and prevents the abuse of their power in terms of investment supervision. Whilst it assists foreign investors, to a given extent, to deal with dawn raids by the Vietnamese authorities as well.

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