Extend Foreign Company Investment Project in Vietnam

Extension of the investment project implementation period is the adjustment of the investment project’s operating period recorded on the Investment Registration Certificate. When the investment project is about to expire, a foreign direct investment company (FDI) can apply for an extension of the investment project’s operating period. So how does the FDI company apply for an extension of the investment project implementation period? In the following article, Viet An Law will provide information on this issue according to extend foreign company investment project in Vietnam.

Implemented time of the FDI company‘s investment project

According to Article 44 of the Investment Law 2020, the duration of an investment project is determined depending on the location and area where the investment project is implemented and local regulations, accordingly:

• The operating term of an investment project in an economic zone must not exceed 70 years.
• The operating term of an investment project outside an economic zone shall not exceed 50 years. An investment project implemented in an area with difficult socio-economic conditions, an area with particularly difficult socio-economic conditions, or an investment project with large investment capital but slow capital recovery, may have a longer duration but shall not exceed 70 years.

However, when issuing the first investment registration certificate, the Management Authority often grants the foreign investor a project duration that is lower than the maximum duration granted for that project. Therefore, when the project implementation period expires without violating the provisions of Vietnamese law, the FDI company needs to apply for an extension of the investment project duration.

Conditions to extend foreign company investment project in Vietnam

According to Clause 4, Article 27 of Decree 31/2021/ND-CP, except for cases where an extension is not permitted, if an FDI company wishes to continue implementing an investment project after the end of the operating period approved by a competent authority for investment policy, the investment registration agency shall consider and decide to extend the operating period of that project if the following conditions are met:

• Following national planning, regional planning, provincial planning, urban planning, and planning of special administrative-economic units (if any);
• Consistent with the goals and orientations of urban development, housing development planning programs (for housing construction investment projects, urban areas);
• Meet the conditions for land allocation and land lease according to the provisions of the law on land (for cases of requesting land use extension).

Cases where investment projects are not extended

Pursuant to Clause 4, Article 44 of the Investment Law 2020, the following investment projects are not allowed to extend their operating period, specifically:

• Investment projects using outdated technology, potentially causing environmental pollution and resource-intensive;
• Investment projects in which the investor must transfer assets without compensation to the Vietnamese State or the Vietnamese party.

Investment project extension dossier

Pursuant to Clause 2, Article 55 of Decree 31/2021/ND-CP, the dossier for extension of the implementation period of an FDI company investment project includes:

• Document requesting an extension of investment project operation period;
• Decision approving investment policy;
• Investment registration certificate;
• Decision approving the investor or documents of equivalent legal value;
• Certificate of Land use rights or equivalent legal documents;
• Documents proving the financial capacity of the investor include one of the following documents: financial statements of the investor for the last 2 years; financial support commitment of the parent company; financial support commitment of a financial institution; guarantee of the financial capacity of the investor; other documents proving the financial capacity of the investor.

Procedures to extend foreign company investment project in Vietnam

Pursuant to Clause 9, Article 27, and Clause 2, Article 55 of Decree 31/2021/ND-CP, the procedure for extending the operation period of an investment project is carried out in the following order:

Step 1: Apply for extension of the investment project implementation period

• For investment projects that have been approved in principle, investors submit their dossiers to the Ministry of Planning and Investment or the Investment Registration Agency corresponding to the authority approving the project’s investment policy.
• The investment project has been granted an Investment Registration Certificate, the investor submits the application to the Investment Registration Authority.

Step 2: Consult and consider extending conditions

Within 03 working days from the date of receiving valid dossiers, the Ministry of Planning and Investment and the investment registration agency shall send the dossiers to the land management agency and relevant agencies to obtain opinions on meeting the conditions for extending the operation period of the investment project;

Within 10 days from the date of receiving valid documents, the consulted agency shall give its opinion on meeting the conditions for extending the project’s operating period.

Step 3: Prepare appraisal report

Within 15 days from the date of receipt of valid dossiers, the Ministry of Planning and Investment and the investment registration agency shall consider the conditions for extending the operation period of the investment project to prepare an appraisal report to submit to the agency approving the investment policy.

Step 4: Decision to extend the operation period of the investment project

Within 03 working days from the date of receipt of the report from the Ministry of Planning and Investment, the investment registration agency and the investment policy approval agency shall decide to extend the operation period of the investment project.

Notes when extending the implementation period of investment projects

Regarding the renewal conditions

In case the investment project meets the conditions for land lease and land allocation but does not meet the conditions for national planning and plans; urban development goals and orientations, housing development plans and programs, the competent authority approving the investment policy and the investment registration agency shall consider extending the operation period of the investment project every year until there is an annual land use plan of the district level following the provisions of the law on land. The investor shall only carry out the procedure for extending the operation period of the project for the first year of extension.

Extension implementation deadline

• For investment projects using land, at least 06 months before the expiration of the investment project’s operating period, the FDI company must carry out procedures to extend the investment project’s operating period.
• For projects that do not use land, the law does not stipulate a minimum time for applying to extend the project’s operating period.
• Currently, in addition to projects with investment policy approval, small-scale projects usually only have a term of 3-5 years. Therefore, the extension will not exceed the term of the initially issued investment registration certificate.

Regarding adjusting the investment term

During the implementation of an investment project, an FDI enterprise may adjust the duration of the investment project to increase or decrease. The duration of the investment project after adjustment shall not exceed 50 years for investment projects outside economic zones; and shall not exceed 70 years for projects within economic zones.

Above is all the information on regulations to extend foreign company investment project in Vietnam. Clients who need to establish a company with foreign investment capital, please contact Viet An Law for the best advice and support!

Update: 8/2024