Investors benefit from Vietnam’s new planning law
The new policies will simplify procedures, explaining that instead of 95 laws and ordinances, investors only have to relate to two legal documents regulating planning. This is a way to reduce administrative procedures and increase transparency and stability of the law.
The long-awaited new policies on planning, which feature many positive changes aiming towards market orientation, transparency and fair competition, will help dispel bottlenecks and ease performance of firms, especially foreign ones, in many sectors.
The Law on Planning and Decree No.37/2019/ND-CP on guiding its implementation, effective from this month, are important in light of amending the whole system of the country’s planning.
According to Vaibhav Saxena, lawyer at Vietnam International Law Firm, the new regulations have significant impacts on the Vietnamese business environment as they have improved the quality and efficiency of planning and adjusted current planning to market-based orientation and international integration.
Specifically, the planning of product development is removed, while creating a larger development space for cities and provinces, as well as businesses. This means that the planning will be based on geographical zoning instead of the previous quota system. Thus, the government will provide far larger space for market dynamics to arrange projects.
In this light, the government will provide orientations and recommendations for the development of territorial planning and create development premises by developing infrastructure and protecting natural resources and the environment. Meanwhile, cities, provinces, and businesses will have the competence to issue planning for the development of certain products to ensure efficiency and to meet their development demands.
According to Saxena, Decree 37 will contribute to solving the slowdown of hundreds of projects and other works, as well as removing problems in production and business activities across many sectors.
In addition, it will also increase the clarity and transparency of regulations and enhancing management effectiveness by simplifying procedures to shorten the timeline for granting approvals and permits besides boosting harmonization among levels of agencies, hence avoiding discrepancies during project appraisal.
With the application of the new decree, the cost of time and resources that enterprises endure is cut down, enabling enterprises to enhance efficiency and keeping pace with emerging business opportunities.
According to Kent Wong, vice-chairman of the European Chamber of Commerce in Vietnam’s Legal Sector Committee, when investing in Vietnam, foreign investors must pay attention to the current types of planning that directly affect the approval of projects.
The reform of the planning system aiming towards market orientation, transparency, and fair competition will give EU companies and other investors equal opportunities in accessing land and other economic resources, and bring in many benefits.
Wong said the new policies will simplify procedures, explaining that instead of 95 laws and ordinances, investors only have to relate to two legal documents regulating planning.
This is a way to reduce administrative procedures and increase transparency and stability of the law.
Besides, they will also help terminate some types of product planning, as well as some unusual types of planning such as planning of rice export traders, planning of tobacco business, and planning of tilapia.
The competent state agency will only formulate plans for infrastructure, resource use, and environmental protection. The Law on Planning completely eliminates product planning, and will shift focus to a market-oriented economic approach.
The regulations will give foreign investors a vision for investment, Wong said, explaining according to the Ministry of Planning and Investment, most of the current plans are only valid until 2020. The government will soon adopt a strategy for the period of 2021-2030. The Law on Planning and Decree 37 will act as an important legal background for building that upcoming strategy.
However, Wong noted, the Law on Planning and Decree 37 do not contain detailed guidelines on the scope, order, and procedures for formulation, appraisal, and approval of planning adjustments in the transition period. Therefore, the adjustment and supplementation of the project to the previously approved planning face difficulties due to a lack of legal regulations.