Notable Terms in the Law on Investment and the Law on Public Investment

The most important factor in studying any particular field is understanding the meaning of the terminology used in that field (i.e., understanding technical terms). In contracts, the opening section is usually devoted to definitions and interpretations of terms, to ensure that the parties share a common understanding and to avoid disputes.

Accordingly, this blog will present statutory definitions under Vietnamese law in different areas for practical application.

This article will list several commonly used terms under the Law on Investment.

Specifically:

• Approval of investment policy means the competent state authority’s approval of the objectives, location, scale, schedule, duration of project implementation; the investor or the form of investor selection; and any special mechanisms or policies (if any) for the implementation of the investment project.

• Investment registration authority means the competent state authority that issues, amends, or revokes Investment Registration Certificates.

• National investment database means the collection of data on investment projects nationwide, connected with the databases of relevant authorities.

• Investment project means a set of proposals on the medium- or long-term use of capital to carry out business investment activities in a specific geographical area, within a defined period of time.

• Expansion investment project means a project that expands an existing investment project by increasing its scale, improving capacity, renewing technology, reducing pollution, or improving the environment.

• New investment project means an investment project implemented for the first time or one independent from an existing project.

• Start-up innovation investment project means a project implemented based on the exploitation of intellectual property, technology, or new business models with high growth potential.

• Business investment means an investor’s expenditure of capital to carry out business activities.

• Business investment conditions mean the requirements that individuals and organizations must satisfy in order to conduct business investment in conditional business lines.

• Market access conditions applicable to foreign investors mean the conditions that foreign investors must satisfy to invest in sectors and trades included in the List of sectors and trades with restricted market access for foreign investors under Clause 2, Article 9 of the Law on Investment.

• Investment Registration Certificate means a paper or electronic document recording an investor’s registered information on an investment project, issued by the investment registration authority.

• National investment information system means the professional information system used to monitor, evaluate, and analyze investment nationwide, serving state management and supporting investors in conducting investment activities.

• Outbound investment activities mean an investor’s transfer of investment capital from Vietnam abroad, using the profits obtained from such investment capital to carry out business investment activities abroad.

• Business cooperation contract (BCC contract) means a contract signed between investors for business cooperation, profit sharing, or product sharing in accordance with law, without establishing a legal entity.

• Export processing zone means an industrial zone specialized in producing export goods, providing services for export production, and carrying out export activities.

• Industrial zone means a zone with a defined geographical boundary, specialized in industrial production and providing services for industrial production.

• Economic zone means a zone with a defined geographical boundary, consisting of multiple functional areas, established to achieve objectives of investment attraction, socio-economic development, and defense and security protection.

• Investor means an organization or individual that carries out business investment activities, including domestic investors, foreign investors, and foreign-invested economic organizations.

• Foreign investor means a foreign national or an organization established under foreign law that conducts business investment activities in Vietnam.

• Domestic investor means a Vietnamese national or an economic organization without foreign investors as members or shareholders.

• Economic organization means an organization established and operating under Vietnamese law, including enterprises, cooperatives, unions of cooperatives, and other organizations conducting business investment activities.

• Foreign-invested economic organization means an economic organization in which a foreign investor is a member or shareholder.

• Investment capital means money and other assets as prescribed by civil law and international treaties to which the Socialist Republic of Vietnam is a member, used to conduct business investment activities.

(Legal basis: Article 3, Law on Investment 2020)

In addition, attention should also be given to terminology under the Law on Public Investment, as follows:

• Report on proposal for investment policy means a document presenting preliminary research on the necessity, feasibility, effectiveness, proposed funding sources, and level of funding for a public investment program, or Group-B or Group-C project, serving as the basis for the competent authority to decide on the investment policy.

• Pre-feasibility study report means a document presenting preliminary research on the necessity, feasibility, effectiveness, total investment, and proposed funding sources of a national important project or Group-A project, serving as the basis for the competent authority to decide on the investment policy.

• Feasibility study report means a document presenting research on the necessity, feasibility, effectiveness, funding sources, and level of funding of a public investment program or project, serving as the basis for the competent authority to make an investment decision.

• Ministries, central and local authorities mean agencies or organizations assigned by the Prime Minister to manage public investment plans, including:
  a) Central authorities of political organizations, the Supreme People’s Procuracy, the Supreme People’s Court, the State Audit, the Office of the Party Central Committee, the Office of the President, the Office of the National Assembly, ministries, ministerial-level agencies, government-attached agencies, central authorities of the Vietnam Fatherland Front and political–social organizations (hereinafter referred to as ministries, central authorities);
  b) Provincial-level People’s Committees;
  c) State-owned enterprises, agencies, organizations, and other enterprises assigned by competent state authorities in writing to implement public investment tasks or projects.

• Public investment programs and projects using ODA or concessional loans from foreign donors include public investment programs, investment projects, and technical assistance projects preparing for investment, funded by ODA or concessional foreign loans.

• Program owner means the agency or organization assigned to take primary responsibility for managing a public investment program.

• Project owner means the agency or organization directly assigned to manage a public investment project.

• Investment policy means the competent authority’s decision on the principal contents of a program or project, serving as the basis for formulating, submitting, and approving investment decisions, or approving feasibility study reports of public investment projects.

• Public investment program means a set of objectives, tasks, and solutions designed to achieve socio-economic development goals.

• National target program means a public investment program designed to achieve socio-economic objectives for a specific period nationwide.

• Managing authority means the ministry, central, or local authority specified in Clause 4 of this Article that manages a program or project.

• Specialized public investment management authority means a unit responsible for managing public investment under the Ministry of Planning and Investment; or a unit assigned to manage public investment under ministries, central authorities, local authorities, or public non-business units.

• State authorities responsible for public investment management include the Government, the Ministry of Planning and Investment, and People’s Committees at all levels.

• Public investment project means a project wholly or partly funded by public investment capital.

• Emergency public investment project means a public investment project decided by a competent authority to promptly prevent, respond to, or remedy consequences of natural disasters, catastrophes, epidemics, or to perform urgent tasks for the assurance of national defense, security, foreign affairs, or national political missions.

• Public investment means the State’s investment activities in programs, tasks, projects, and other public investment entities in accordance with this Law.

• Proposal for programs or projects using ODA or concessional foreign loans means a written report explaining the necessity of investment, consistency with the orientation of attraction, management, and use of ODA and concessional foreign loans in each period, with proposed funding structure, donors, and domestic financial mechanisms, serving as the basis for approval by the competent authority.

• Public investment activities include formulation, appraisal, and decision on investment policy; decision on public investment programs, tasks, and projects; formulation, appraisal, approval, assignment, and implementation of public investment plans; management and use of public investment capital; acceptance, handover, and finalization of public investment programs and projects; monitoring, evaluation, inspection, and supervision of public investment plans, programs, tasks, and projects.

• Public investment plan means a set of objectives, orientations, and lists of public investment programs and projects; balancing public investment capital sources, allocation plans, solutions for mobilizing resources, and implementation arrangements.

• Investment preparation tasks mean activities to prepare project proposals for ODA- or concessional loan-funded projects; formulation, appraisal, and decision on investment policy; formulation, appraisal, and decision on investment projects.

• Planning tasks mean activities carried out to formulate, publish, adjust, and publish adjusted plans in accordance with the Law on Planning.

• Outstanding construction debts mean the value of completed work volume of programs, tasks, or projects already accepted, but not yet allocated a medium-term public investment plan by the competent authority; excluding emergency public investment projects.

• Decentralization of public investment management means the determination of powers and responsibilities of competent authorities, organizations, and individuals in public investment activities.

• Public investment capital includes state budget capital allocated for public investment; lawful revenues of state authorities and public non-business units allocated for investment in accordance with law.

• Central budget capital means capital allocated for public investment from the central budget in accordance with the Law on State Budget.

• Local budget capital means capital allocated for public investment from local budgets in accordance with the Law on State Budget.

• Targeted central budget capital transferred to local budgets means central budget capital allocated to local budgets for investment in programs, tasks, projects, and other public investment entities for specific tasks decided by the competent authority.

(Legal basis: Article 4, Law on Public Investment 2024)