In the context of Vietnam’s strong economic development and attraction of many investment capital flows, besides the establishment of new investment projects, extending the investment project for businesses that are already operating in Vietnam is a particularly important issue. However, performing procedures to extend investment project in Vietnam requires investors to be fully aware of the sequence and necessary conditions to ensure the investment objectives are achieved. Therefore, in this article, we will learn about the sequence of procedures for extending investment projects in Vietnam, thereby helping investors have an overview of this process and make the right decisions for their project.

1. The duration of operation of the investment project

The duration of operation of the investment project is calculated from the date the investor is granted the Decision on approval of the investor, the Decision on approval of the investment policy, or the Investment Registration Certificate issued for the first time.

For investment project assigned land by the State, leased land, or land use purposes changed, the duration of operation of the project is calculated from the date the investor is granted the decision to assign land, lease land, or change land use purposes. In case the investor has been granted the decision to assign land, lease land, or change land use purposes but has not received the land, the duration of operation of the investment project is calculated from the actual date of land handover.

The duration of operation of investment project in an economic zone is not more than 70 years. The duration of operation of investment project outside the economic zone is not more than 50 years. For investment projects implemented in areas with difficult socio-economic conditions, areas with particularly difficult socio-economic conditions, or investment projects with large investment capital but slow capital recovery, the duration of operation of the investment project may be longer, but not more than 70 years. For investment projects assigned land or leased land by the State but the investor is unable to receive the land, the time the State delays in handing over the land is not counted in the operating term, and the implementation progress of the investment project.

During the implementation of the investment project, the investor adjusted the duration of the investment project, either increasing or decreasing it.

2. When does a business have to perform the procedure for extending investment project?

The duration of the investment project is specifically recorded on the Investment Registration Certificate and is mandatory information. However, the duration of each business’s investment project may differ. Typically, the duration of the investment project shall depend on the demand of each enterprise and the policy of the investment registration agency when reviewing the business profile. According to management principles, the investment project is only allowed to operate within the duration of the investment project, so when the investment project is about to expire, the investor shall perform necessary procedures to extend the investment project.

Based on the objectives, scale, location, and operational requirements of the investment project, the competent authority that approves the investment policy and the investment registration agency will consider and decide on the duration of operation and adjust the operating term of the investment project.

3. What are the conditions for extending an investment project?

Investor who has a demand to continue implementing an investment project after the end of the duration of operation shall have their project evaluated by competent authorities for investment approval and registration to decide whether to extend the duration of operation of the project if he/she meets the following conditions:

• Conformity with national, regional, provincial, urban, and special economic-administrative unit planning (if any); conformity with urban development objectives, housing development plans (for housing construction and urban area investment projects);
• Fulfillment of land allocation and lease conditions as prescribed by land law (for extension of land use).

Note that for investment projects that involve land use, investor shall complete the procedure for extending the duration of operation of the investment project at least 6 months before the end of the duration of operation.

4. Procedures for extending an investment project

To extend an investment project, the enterprise shall perform procedures at the investment registration agency to adjust the project duration on the Investment Registration Certificate, which is commonly referred to as the procedure for adjusting the Investment Registration Certificate.

The basic dossier shall  include:

• A written request for extension of the duration of operation of the investment project;
• Decision approving the investment policy or Investment Registration Certificate, decision approving the investor, or equivalent legal documents;
• Report on the implementation of the investment project up to the proposed date of adjustment of the investment project;
• Amended and supplemented Enterprise Charter or amended and supplemented Joint Venture Contract (if any);
• Investment project proposal;
• Investor’s decision on adjusting the investment project (decision and valid copy of the meeting minutes of the Council of Members/Shareholders’ General Meeting/Member Partnership/Owner of the Economic Organization implementing the investment project on adjusting the investment project or other legal documents as prescribed by law);
• Legal documents related to the main office address and project implementation location (documents include: Valid Certified Copy of the Lease Contract or other legal documents proving the investor’s right to use the registered location);
• Power of attorney for the dossier submitter.

5. Some questions related to investment project extension:

Foreign investor wants to extend the project implementation duration, but he/she submitted the application to the investment registration agency after the expiration date. Can the Investor be considered for performing the project extension?

Reply: According to Article 48 of the Law on Investment 2020 regarding the termination of investment project activities, investor may terminate investment project activities in the following cases: the Investor decides to terminate the investment project; under the conditions for terminating activities specified in the contract or the business’s charter; the duration of operation of investment project has expired. Therefore, when the duration of the project ends, the project shall be went through the termination procedures as prescribed. To ensure the stable operation of the company, before the duration of operation of project ends, the enterprise  shall submit documents to the competent authority to extend the duration of operation of the investment project to continue business operations.

Which investment projects shall not be eligible for an extension of the duration of operation?

Reply:

• Investment projects using technological chains that operate not in accordance with the regulations of the National Technical Standards on safety, energy saving, and environmental protection, or where the capacity (calculated by the quantity of products generated by the technological chain within a unit of time) or efficiency of the technological chain is less than 85% of the design capacity or efficiency, or the consumption of raw materials, supplies, and energy exceeds 15% of the design.
• Investment projects using machinery and equipment to produce goods with HS codes (export and import commodity codes) under Chapters 84 and 85 of the Vietnamese export and import commodity list that are more than 10 years old, or that operate not in accordance with the regulations of the National Technical Standards on safety, energy saving, and environmental protection.

How many years can an investment project be extended?

Reply: The extension duration for investment projects will be considered based on the project’s objectives, scale, location, operation requirements, and the investor’s demand. The investment registration agency will consider the requirements that the investor meets, the effectiveness of the operation, the investor’s compliance during the project operation (contributing capital on schedule, reporting fully, fulfilling tax obligations, land use fees, etc.), to decide whether to approve the investor’s request for an extension or not.

Time of writing: 28/04/2023

The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer at info@cdlaf.vn

You can refer for more information:

• Reports that Investors shall perform in 2023
• Establishment of Enterprise in Vietnam, What Foreign Investors Need to Consider (Part 1)
• Establishment of Enterprise in Vietnam, What Foreign Investors Need to Consider (Part 2)
• Procedure for Foreign Investor to contribute capital, purchase shares in the enterprise in Vietnam.
• The enterprise with opening and using direct investment capital account
• Avoiding the risks when leasing the office in Vietnam – some recommendations
• Foreign Investors provide Employment Services in Vietnam
• Franchise in Vietnam (Part 1)
• Franchise in Vietnam (Part 2)
• Tax preference when trading business in service and software product in Vietnam
• 5 steps that Investors need to set up a business in Vietnam