The Government has proposed some changes to Investment Law, Enterprise Law, Land Law, Bidding Law, Construction Law, Environment Law, Fire Protection and Prevention Law and Law on Corporate Income Tax. It is expected that the amendments will be adopted by the National Assembly in May 2009. The proposed amendments envision changing some key provisions in laws affecting the construction sector. Yet, if one takes a closer look on the proposed amendments, the impact on foreign investment is quite significant in the event this draft law is approved. 

Decrease of Preferential Import Duty Rates

New import tax rates will apply to imported motor vehicle components and accessories declared to Customs authorities from 9 March 2009. There will be a slight decrease, mostly of between 1% to 5%, for some kinds of engines, gear boxes, clutches and their parts in Groups 84.07, 84.08, 84.09 and 87.08.

Nearly three years have passed since the laws on Enterprises and Investment took effect in July 2006. These two laws opened new opportunities to foreign investors by levelling the playing field for both domestic and foreign investors. But, three years on, there have been some shortcomings as well.

For one, the procedures for registering the establishment of an enterprise with foreign ownership remain a major concern due to a conflict in provisions in the two laws and regulations in Government Decree No 139/2007/ND-CP of September 2007.

In many countries, arbitration is a common alternative for dispute resolution, bringing a number of advantages over going to court, from simplicity and time-saving, to confidentiality and less interference with normal business operations.

The telecommunications sector in Viet Nam is among those sectors which are "conditional" for foreign investors. In other words, it appears on a list of sectors for which foreign investment is only allowed under certain conditions. (The most recent such list can be found in Government Decree No. 108/2006/ND-CP of September 22, 2006.)

1. Introduction
Vietnam was admitted to the World Trade Organization (WTO) on 7 November 2006 after eleven years of negotiation as Vietnam committed to WTO standards with transparency, due process and liberalization of trade. The National Assembly of Vietnam approved WTO Accession Protocol on 29 November 2006.

Is the glass half empty or half full? On September 5 2007, the government promulgated Decree 139/2007/ND-CP ("Decree 139") detailing some provisions of the Law on Enterprises passed by the National Assembly on November 29 2005 (the "Law on Enterprises"). Decree 139 provides specific guidelines on the establishment, management, operation, restructuring and liquidation of enterprises operating in Vietnam, including domestic and foreign-invested enterprises. Decree 139 reflects the commendable efforts made by the Vietnamese Government to attract foreign direct investment into Vietnam and encourage the transparent operations of enterprises.

Since early this year, the Ministry of Finance has been circulating for public comment its draft Law on Corporate Income Tax as well as a draft decree that would implement the law in replacement of Government Decree No 24/2007/ND-CP of February 14, 2007, which guides the current Law on Corporate Income Tax. The two drafts embody a number of changes to the current law, changes that would have a significant impact on businesses.

Vilaf