TABLE OF CONTENTS:
- What is the normal duration of an investment project?
- What is the starting point of an investment project?
- What are the requirements for extending the operation duration of the investment project?
- What are the dossiers to extend the operation duration of the investment project?
- 5 steps to extend the operation duration of the investment project
- Notes when extending the operation duration of the investment project
- Phong & Partners provides the service of extending the operation duration of an investment project
1. What is the normal duration of an investment project?
Investment project means a collection of proposals for the expenditure of mid-term or long-term capital to carry out investment activities in a particular administrative division over a certain period of time. Accordingly, depending on the form, nature and scale of each project, the investment licensing authority shall decide the operation duration of that project, specifically:
- The duration of an investment project outside an economic zone shall not exceed 50 years.
- The duration of an investment project inside an economic zone, in a disadvantaged area, an extremely disadvantaged area or a project with large investment capital but with slow rate of capital recovery shall not exceed 70 years.
That is the regulation on the maximum duration, however, in fact, many investors often wonder that whether the project’s operation duration is 03 years, 10 years or 15 years. Regarding this issue, when submitting dossiers to license the project, the investor shall propose the duration of their investment project as long as being ensured not to exceed the above-mentioned legal provisions. However, when considering licensing an investment project, state agencies shall consider many aspects to evaluate including the project’s effectiveness and impacts on the economy and society. In case the project’s operation duration is too short while that project requires a lot of initial investment, it is likely not licensed. Therefore, when registering the operation duration of the project, in the registration dossier, investors need to clearly state the investment objectives, scale, nature and implementation progress of each stage of the investment project; consider the total of the project’s operation duration to make sure that it is really appropriate.
2. What is the starting point of an investment project?
Normally, the starting point of an investment project begins from the date on which the investor is issued with the Decision on investor approval, the Decision on approval for both investment guidelines and investor or the Investment Registration Certificate for the first time.
For the investment project which uses land allocated or leased out by the State or is permitted by the State to repurpose land, its duration begins from the date on which the investor is issued with the Decision on land allocation, Decision on land lease or Decision on land repurposing. If the investor has obtained the Decision on land allocation, Decision on land lease or Decision on land repurposing but the transfer of land is delayed, the duration of the investment project begins from the date on which land is transferred on site.
3. What are the requirements for extending the operation duration of the investment project?
In principle, when the operation duration expires, the investor will carry out the procedures for terminating the investment project and liquidating the project. However, the law allows investors to extend the project’s operation duration to continue implementing the project.
When the operation duration of an investment project expires, if the investor wishes to continue implementing the investment project, the investor may be considered extending the operation duration of the investment project on the basis of its objectives, scale, location and operation requirements, but not exceeding the maximum time limit specified in Section 1. At that time, the investor must satisfy the following requirements:
- Their investment projects do not use obsolete, environment threatening or resource-intensive technologies; The projects in which the investor must transfer assets without reimbursement to the State of Vietnam or the Vietnamese side.
- For residential housing and urban area construction investment projects:
- That project must consistent with the national planning, regional planning, provincial planning, urban planning and special administrative-economic unit planning (if any);
- That project must consistent with the objectives and orientations for urban development or residential housing development plans and programs.
- In the case of applying for extension of land use term, the requirements for land allocation or land lease prescribed by the law on land are met.
4. What are the dossiers to extend the operation duration of the investment project?
Subject to (i) the investment project whose investment guidelines have been approved; or (ii) the investment project that has been issued with the investment registration certificate and not subject to approval for its investment guidelines, for which the investor shall prepare the dossiers as follows:
- An application form for extension of the project’s duration;
- Decision on approval for investment guidelines (if any);
- Investment Registration Certificate;
- Decision on investor approval or equivalent document;
- Certificate of land use rights or equivalent document;
- Document (s) proving the financial capacity of the investor including at least one of the following documents:
- The investor’s financial statements for the last two years;
- Commitment of the parent company to provide financial support;
- Commitment of a financial institution to provide financial support;.
- Guarantee for the investor’s financial capacity; other documents proving the investor’s financial capacity.
- Report on the implementation of the investment project up to the time of extension of the operation duration of the investment project;
- The investor’s decision on extending the operation duration of the investment project in case the investor is an organization.
5. 5 steps to extend the operation duration of the investment project
- Step 1: Preparing the dossiers
- Investor prepares 04 dossiers as mentioned in Section 4.
- Step 2: Submitting the dossiers
- For the investment project whose investment guidelines have been approved, the investor shall submit dossiers to the Ministry of Planning and Investment or the investment registration agency corresponding to the competence to approve the project investment policy.
- For the investment project that has been issued with the Investment Registration Certificate and not subject to approval for its investment guidelines, the investor shall submit dossiers to the Investment Registration Agency.
- Step 3: The application-receiving agency shall review and consider requirements for extension
- Within 03 working days from the date of receiving the valid dossier, the Ministry of Planning and Investment, or the investment registration agency shall send the dossiers to the land authority and relevant authorities to seek their opinions about fulfillment of the requirements for extending the operation duration of the investment project;
- Within 10 days from the date of receiving the valid application, the enquired authorities shall give their opinions about fulfillment of the requirements for extension of the project’s operation duration.
- Step 4: The application-receiving agency shall make an appraisal report
- Within 15 days from the date of receiving the valid dossier, the Ministry of Planning and Investment, or the investment registration agency shall consider the requirements for extending the operation duration of the investment project to make an appraisal report and submit it to the investment guideline approving authority.
- Step 5: Deciding to extend the operation duration of the investment project
- Within 03 working days from the date of receiving the report from the Ministry of Planning and Investment, or the investment registration agency, the investment guideline approving authority shall decide to extend the operation duration of the investment project.
Diagram of orders, procedures for extending the operation duration of an investment project
6. Notes when extending the operation duration of the investment project
- Regarding the requirements for extension: In case the investment project satisfies the requirements for land lease or land allocation but fails to satisfy the requirements for the national planning, regional planning, provincial planning, urban planning; the objectives and orientations for urban development or residential housing development plans and programs, the authority that has the authority to approve investment guidelines and the investment registration authority shall consider extending its duration on a year-by-year basis until the district’s annual land use plan is available in accordance with regulations of law on land. The investor shall only carry out procedures for extending the duration for the first year of extension.
- Regarding minimum time limit to extend:
- For investment projects using land, within 06 months before the expiration of its duration, the investor shall carry out procedures for extending the operation duration of the investment project.
- For projects without land use, the law does not stipulate the minimum time for applying for extension of the project’s operation duration. It can be seen that the total time for state agencies to review the dossiers and make a decision to extend the project is about 30 days. However, in fact, this period can be extended for a variety of reasons. Therefore, in order not to affect the project operation, investors should apply the latest from 3 to 5 months before the expiry of the operation duration of the investment project.
- Regarding adjustment of investment duration: During the implementation of an investment project, the investor may increase or decrease the operating duration of the investment project. The operating duration of investment projects after adjustment shall not exceed 50 years or no more than 70 years as prescribed in Section 1.
- Regarding projects with a commitment to transfer assets without reimbursement to the State of Vietnam or to the Vietnamese side: Time limit for state enterprises (Vietnamese parties) who are slowly transferred land to contribute capital in the form of land use rights shall not be included in the duration of the project with a commitment to transfer assets without reimbursement.
7. Phong & Partners provides the service of extending the operation duration of an investment project
With a team of lawyers and legal experts with extensive experience in consulting and implementing investment procedures for foreign investors, Phong & Partners provides the service “Extension of project operation duration” with the highest quality. Phong & Partners’s tasks include but not limited to the following:
- Counseling on regulations on extension of project operation duration;
- Counseling on requirements, dossiers and documents to be prepared;
- Drafting and completing the dossiers for extension of the project operation duration;
- Representing clients to submit and receive dossiers; discussing with agencies about the granting of an extension of the project operation duration.
The above is the content of the operation duration of the investment project that Phong & Partners would like to send to You. For any information, please contact the details below.
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