Approval of Investment Policy: The First and Mandatory Step for Implementing a Project in Vietnam
DNP VIET NAM LAW FIRM prepares this article to clarify the forms of investor selection and key considerations by the provisions of the Law on Investment 2020 and the Land Law 2024.
1. What is “Approval of Investment Policy”?
According to Clause 1, Article 3 of the Law on Investment 2020. Approval of investment policy refers to the approval by a competent state authority regarding the following matters:
- The objectives, location, scale, progress, and duration of project implementation;
- The investor or the method of investor selection;
- Special mechanisms or policies (if any) for project implementation.
2. Selection of Investors for Project Implementation in 2023
Pursuant to Article 29 of the Law on Investment 2020. The selection of investors to implement an investment project shall be carried out through one of the following three main methods:
2.1 Land Use Right Auction or Investor Selection via Bidding
This is a competitive method used to select investors with the necessary capabilities and the most optimal project proposals.
However, during the auction or bidding process, if:
- There is only one applicant, or
- The auction or bidding fails (due to not meeting the legal requirements),
Then the competent authority may proceed with the approval of that investor, provided that the investor fully satisfies the prescribed conditions.
In addition, introduces further cases in which the competent authority may approve an investor without conducting an auction, including:
- When the land use right auction is unsuccessful;
- When only one investor is meeting the conditions in the expression of interest phase. (i.e., there is only one eligible investor, insufficient for competition).
( Pursuant to Clause 3, Article 250 of the Land Law 2024)
2.2 Direct Investor Approval without Auction or Bidding
This applies to investment projects that require approval of the investment policy. In the following specific cases, the competent authority shall concurrently approve the investor without conducting an auction or bidding process:
- The investor has lawful land use rights, except where the land is subject to recovery by the State for purposes of national defense, security, or public interest;
- The investor acquires, contributes capital with, or leases agricultural land for non-agricultural projects, provided that the land is not subject to recovery by the State;
- The project is implemented in an industrial park or high-tech zone where infrastructure is already available;
- Other special cases as provided by law where auction or bidding is not required.
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3. Authority to Approve Investment Policy
| No | Project | Authority |
| 1 | Investment projects with significant environmental impacts or potential serious environmental risks, including: – Nuclear power plants; – Investment projects requiring conversion of wet rice land of two or more crops with an area of 500 hectares or more; – Investment projects requiring resettlement of 20,000 people or more in mountainous areas, or 50,000 people or more in other regions; – Investment projects requiring special mechanisms or policies are subject to National Assembly approval. (Refer to Article 30 of the Law on Investment 2020) | National Assembly |
| 2 | Investment projects, regardless of funding source, fall under one of the following categories: – Projects requiring resettlement of 10,000 people or more in mountainous areas, or 20,000 people or more in other regions; – New construction of terminals, terminal zones under special seaports, or terminals, terminal zones with an investment capital of VND 2,300 billion or more at Class I seaports; – Oil and gas processing projects; – Construction and business of infrastructure in industrial parks and export processing zones. (Refer to Article 31 of the Law on Investment 2020 as guided, amended, and supplemented) | Prime Minister |
| 3 | For investment projects specified at Points a, b, and d, Clause 1, Article 32 of the Law on Investment, implemented within industrial parks, export processing zones, high-tech zones, or economic zones in conformity with the approved planning by a competent authority.(Clause 2, Article 32 of the Law on Investment 2020) | Management Boards of industrial parks, export processing zones, high-tech zones, and economic zones |
4. Avoiding Confusion with the Investment Registration Certificate
| Criteria | Investment Policy Approval | Investment Registration Certificate |
| Legal basis | Clause 1, Article 3, Law on Investment 2020 | Claus11e Article 3, Law on Investment 2020 |
| Content | Clause 1, Article 37 of the Law on Investment 2020 | Adocument recording the registered information of the investor. |
| Applicable Projects | Projects under Articles 30, 31, and 32 of the Law on Investment 2020 | Clause 1, Article 37 of the Law on Investment 2020 |
| Mandatory Nature | Mandatory if the project falls within the scope requiring policy approval; cannot apply for approval if not required. | Mandatory if the project falls within the scope requiring policy approval; cannot apply for approval if not required. |
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