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Unlocking Investment Opportunities: Overcoming Legal Obstacles with Courage and Foresight

24 May, 2025

The government has submitted to the 9th Session of the 15th National Assembly a law amending multiple laws in the fields of investment, finance, and budget, including the Law on Investment. – Image: Prime Minister Pham Minh Chinh chairs the May 2025 Government meeting on law building

With the spirit of “dare to think, dare to do, dare to innovate, and dare to break through for the common interest” advocated by the Party and the State, isn’t it time we bravely reconsider: Is the Law on Investment still necessary, or at least in need of fundamental amendment?

Prime Minister Pham Minh Chinh affirmed the determination to basically remove institutional bottlenecks in 2025. He also outlined important orientations in state management: Government agencies develop standards, norms, and other necessary conditions and publicly announce them so that people and businesses can implement planning, norms, standards, and conditions and do what the law does not prohibit; meanwhile, instead of pre-checking and licensing, the government strengthens post-checks, inspections, and supervision.

Currently, the government has submitted to the 9th Session of the 15th National Assembly a law amending multiple laws in the fields of investment, finance, and budget, including the Law on Investment.

A Comprehensive Law with Numerous Conflicts

Nominally, the Law on Investment aims to create a legal framework to encourage investment. However, in reality, due to various reasons, most likely legal thinking, approach, and policy design that are inappropriate to the actual situation, it is intervening too deeply in dozens of fields that already have their own specialized laws – from the Land Law (2024), Construction Law (2014, amended in 2020), Electricity Law (2004), Law on Environmental Protection (2020) to the Law on Traffic and Tourism… This overlapping intervention leads to common legal conflicts.

A typical example is that according to the Law on Investment, investment projects for the construction of industrial parks need to be approved by the provincial People’s Committee. But according to the Construction Law, the granting of construction permits must be based on approved planning and design. Meanwhile, according to the Law on Environmental Protection, to establish an environmental impact assessment report, investors need information from detailed planning – which is not available without approval of the investment policy. This cycle prolongs the process for years and can create a mechanism of “asking – giving” to shorten the time.

A similar situation also occurs with renewable energy projects. While the Electricity Law and sector planning allow for the implementation of solar power projects, according to the Law on Investment, localities still have to seek approval from the Ministry of Planning and Investment (now the Ministry of Finance) if the capacity exceeds 50 MW – delaying dozens of projects, especially in the Central and Central Highlands regions during the period of 2020-2022.

It doesn’t stop there. The list of conditional business lines (issued under Appendix IV of the Law on Investment) currently maintains more than 200 industries, including notable areas such as studying abroad consulting services and disability assessment – areas that have been completely liberalized in many countries. In addition, some activities in the logistics field, such as multimodal transport services, are also subject to conditions. This arbitrary listing has legalized the control mechanism into industries that do not really need to be controlled, creating opportunities for harassment and hindering competition.

As a consequence, both investors and management agencies fall into a state of “legal ambiguity”: not knowing which law to follow.

Meanwhile, the concept of “investment project” in the current law is being interpreted too broadly. Just by making a proposal, without capital or commitment of capacity, an investor can access public land. This opens the door to “hand-catching land”, speculation, and distortion of the real estate market.

The investment incentive mechanism is also not designed to be automatic and transparent. Whether or not there is an incentive depends largely on the approval of the competent authority.

In a modern market economy, investment is a right, not a privilege. Entrepreneurs should not have to “ask for investment” – they just need to comply with the law and compete fairly.

As long as the freedom to invest is constrained by invisible layers of procedures, so will the capital flows needed for growth – especially in the context of limited national resources.

All investment encouragement policies – from tax, land to infrastructure – must be specifically legalized

The World Doesn’t Need an Investment Law – Because Their Laws Are Clear

In developed countries such as the United States, Japan, South Korea, Germany, and the United Kingdom, there is no comprehensive investment law. Investors just need to comply with the law – they don’t have to “ask for investment”.

Investment incentives – if any – are stipulated in tax laws, land laws, or innovation policies. What is not prohibited is allowed – this principle is not just theoretical but has been legalized and effectively implemented.

Along with the immediate amendment, the abolition of the Law on Investment as a separate law should be considered as a serious and strategic option.

To replace it, Vietnam needs a new institutional framework with the following core principles:

1. Restore clarity and precision to the specialized legal system: The Land Law, Enterprise Law, Tax Law, Construction Law, and other specialized laws must be restructured towards transparency, stability, and consistency – so that investors only need to comply with the law without having to “ask” anyone. The law must be a reliable map.

2. All investment encouragement policies – from tax, land to infrastructure – must be specifically legalized, with clear conditions and applied transparently, consistently, and uniformly. No one has to knock on doors to ask for what the law has prescribed.

3. Shift from pre-inspection to post-inspection – the foundation of a trusting and responsible institution: When investors fully comply with legal regulations, let them implement the project immediately without being blocked by administrative procedures. The focus of state management must shift to effective post-inspection, ensuring fairness and preventing real risks, instead of formal control from the outset.

4. Establish a concise and targeted screening mechanism, limited only to particularly sensitive areas: Areas related to national defense and security, dual-use technology, and strategic infrastructure – can and should be strictly controlled. But most other sectors must be maximally opened, as practiced by the US, EU, Australia, and many other dynamic economies.

Resolution No. 66/NQ-CP (March 26, 2025) of the Government sets the following targets: Abolish at least 30% of unnecessary business conditions; Reduce at least 30% of the time for handling administrative procedures; Cut by 30% the cost of complying with administrative procedures for businesses.

If the Law on Investment is abolished, according to preliminary estimates, the efficiency will be as follows: Reduce 15-20% of project implementation time by eliminating the investment policy approval procedure; reduce 5-7% of licensing procedures by streamlining the list of conditional business lines; cut 5-10% of administrative burden for foreign investors by integrating the investment and enterprise registration processes.

In total, the abolition of the Law on Investment can help achieve 20-25% of the target of reducing administrative procedures – almost completing the reform goal of Resolution 66/NQ-CP.

In a modern legal institution, investment does not need to be “permitted” by a separate law, but only by a clear, transparent, and unified legal system.

How Will Projects Start Without the Law on Investment?

A common concern is that if the Law on Investment is abolished, investors – especially foreign investors – will start projects in what way? In fact, in a modern legal institution, investment does not need to be “permitted” by a separate law, but only by a clear, transparent, and unified legal system.

For domestic investors, the investment procedure will become more streamlined: just establish an enterprise according to the Enterprise Law and carry out specialized procedures such as land leasing, construction permits, environmental impact assessment… depending on the nature of the project. There is no longer a cumbersome procedure of “investment policy” or “investment certificate” as currently.

For foreign investors, Vietnam can apply a selective screening model as practiced by many developed countries: only projects in sensitive areas (national defense, personal data, strategic infrastructure…) need to be scrutinized. The remaining investors can access the market like domestic enterprises, through the procedure of enterprise establishment and implementation according to specialized laws.

Investment incentives will be integrated into tax laws, land laws, innovation laws, and automatically applied if eligible, instead of having to ask as at present.

In short, abolishing the Law on Investment does not mean loosening management, but shifting to post-inspection management, with a sufficient, unified, and transparent legal basis – in line with the standards of a modern market economy.

How to Handle Prohibited and Conditional Business Lines if the Law on Investment Is Abolished?

The question arises: If there is no Law on Investment, who will regulate the prohibited or conditional industries? The answer is clear: it can be handled concisely in the current legal system.

The list of prohibited business lines can be integrated into the Enterprise Law, as a part of the limitation of the freedom of doing business – in line with the function of the framework law.

Conditional business lines will be handled in three directions: Industries that really need control (such as petroleum, security, finance…) will be clearly stipulated in specialized laws; industries that are no longer reasonable (such as studying abroad consulting, disability assessment…) will be removed from the list; if a comprehensive list is needed, it can be issued together with the Enterprise Law or in the form of a resolution of the National Assembly, but with a more concise and transparent scope than at present.

Management shifts from the mechanism of “prior permission” to smart post-inspection by specialized inspection. This is a model successfully applied by many countries – ensuring public order and security while encouraging innovation and reducing cost burdens on businesses.

Removing Barriers to Pave the Way for a Confident Vietnam

Vietnam is facing the aspiration to develop: becoming a high-income country by 2045. But this aspiration cannot be based on an institution that still holds the “ask – give” mentality. We need a reform to establish a transparent, competitive, and trustworthy legal environment – where all decent investors have the opportunity to develop and prosper.

Resolution No. 66-NQ/TW dated April 30, 2025 of the Politburo identified the elimination of the “ask – give” mechanism as one of the key institutional reforms to promote national development in the new era. A strong nation is one that can unleash all resources that are being bound in every piece of land, sky, sea, and in the hands and brains of every person.

Dr. Nguyen Si Dung

– 06:09 24/05/2025