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This article will provide investors with an overview about Vietnam’s political system and a general understanding of what authorities they should work with to establish a company in Vietnam.
Despite the impact of COVID-19, the Asian Development Bank still forecasts Vietnam to be one of the fastest growing economies in Southeast Asia. The positive outlook surrounding Vietnam is largely attributed to its early and proactive response to COVID-19, which was led by the Government and involved all aspects of society. Figures from the World Economic Forum, Global Peace Institute and Global Finance Magazine have pointed out that Vietnam’s political stability was ranked the second highest among peer countries in the region.
The political system in Vietnam is divided into four hierarchies that include the following levels of management:
– The highest administrative body of the State of the Socialist Republic of Vietnam includes the Prime Minister, Deputy Prime Ministers, Ministers and Heads of the Ministerial level agencies such as the Ministry of Planning and Investment, Ministry of Industry and Trade, Ministry of Natural Resources and Environment, Ministry of Finance and Ministry of Education and Training, among others.
– Organization at local level such as the Department of Planning and Investment, Department of Natural Resources and Environment and Department of Finance, among others, which are under the management of the People’s Committees of Provinces and corresponding levels.
– The People’s Committees of Districts and corresponding levels.
– The People’s Committees of Communes and corresponding levels.
Therefore, an enterprise wishing to enter Vietnam needs to work with the following relevant ministries and agencies:
– Ministry of Planning and Investment: A Government ministry that performs the functions of State management over planning, investment development and statistics. The Ministry’s management functions cover various fields such as domestic investment, foreign investment into Vietnam and Vietnam’s investment abroad, as well as economic zones such as industrial zones, border economic areas, high-tech zones and others. Moreover, the Ministry undertakes procedures for granting, adjusting and terminating the validity of offshore investment registration certificates and issuing investment registration certificates for investment projects that are public-private partnerships (PPP). The Ministry also issues investment certificates for build-operate-transfer (BOT), build-transfer-operate (BTO) and build-transfer (BT) projects.
– Ministry of Construction: This Ministry is responsible for State management of construction, construction planning and technical infrastructure in urban centers, industrial parks, economic zones and hi-tech parks.
– Ministry of Natural Resources and Environment: This Ministry is responsible for State management of land, water and mineral resources.
In addition, the Ministry is involved with the environment, hydrometeorology, climate change, surveying and mapping, integrated management of natural resources and protection of the marine and island environment.
Let’s look at an example of a company with an investment of over VND8tn that wants to register to build a polypropylene (PP) plastic plant with a capacity of 250,000 tons/year from mainly imported liquefied petroleum in Ba Ria – Vung Tau Province. Accordingly, the company must contact the Department of Planning and Investment of Ba Ria – Vung Tau Province to examine the conformity between the investment project with the Province’s planning. If the project fits with the Province’s plan, then the investment registration agency of the Department of Planning and Investment of Ba Ria – Vung Tau Province will make an appraisal report and submit it to the People’s Committee of the Province for the investment policy decision at the provincial level. It normally takes the provincial-level People’s Committee around five working days after receiving the appraisal report to issue the investment registration.
Additionally, an enterprise with investment capital of less than VND6bn and employing less than 3,000 staff needs to work with the management agencies in the second tier, including local authorities such as the Economic Zone Authority, Department of Planning and Investment and Department of Natural Resources and Environment. Specifically, the People’s Committee of the Province or city where the enterprise is headquartered will be the agency that issues investment certificates.
For enterprises whose headquarters are located outside of industrial zones, the Department of Planning and Investment will be responsible for receiving and processing documents. The provincial Department of Natural Resources and Environment works with the People’s Committee to issue land lease permits, land use rights certificates and environmental impact assessments. The Department of Finance approves land prices. Moreover, the local Department of Construction works with the People’s Committee to grant construction permit and planning licenses.
For enterprises headquartered in industrial parks, the Economic Zone Authority will be responsible for receiving and processing documents. The Economic Zone Authority will inspect and consult with relevant agencies, if necessary. If the submitted dossier is qualified and the appraisal is successful, then the management board will issue an investment certificate for that project.
Additionally, facilities in industrial parks are supervised and inspected by the Department of Natural Resources and Environment, Environmental Police Department and District People’s Committee, among others.