In public investment and foreign direct investment (FDI) activities, the investment policy approval represents a pivotal decision issued by the competent authority regarding the fundamental parameters of a project. It serves as the legal foundation upon which the feasibility study report is prepared and the project is formally approved.
During project implementation, if an FDI project undergoes significant changes, the investor is obligated by law to seek amendment to the investment policy approval for the FDI project in accordance with applicable regulations. The following sets out detailed guidance from Siglaw.
What Is the Amendment to Investment Policy Approval?
Under the Law on Investment 2020, investors are entitled to modify project particulars, including the project’s objectives, scale, location, and form of investment, or to transfer or merge the project.
The amendment to investment policy approval is a mandatory legal procedure triggered when such modifications affect material elements of the originally approved project, thereby ensuring continued compliance with applicable planning frameworks and legal requirements.
Circumstances Requiring Amendment to FDI Investment Policy Approval
Pursuant to Clause 3, Article 41 of the Law on Investment 2020, an investor must initiate the procedure for amendment to FDI investment policy approval in the following circumstances:
- Objectives: Any change to or addition of project objectives that falls within the scope of matters requiring investment policy approval.
- Location / Land Area: Any change in project location, or any change in land use area by 10% or more, or exceeding 30 hectares.
- Investment Capital: Any increase or decrease in total investment capital of 20% or more, resulting in a change in project scale.
- Schedule: An extension of the project schedule that makes the total implementation period exceed the approved schedule by more than 12 months.
- Duration: Any change in the operational duration of the project.
- Technology: Any change to technology previously subject to appraisal or solicitation of opinions.
- Investor / Conditions Applicable to the Investor: Any change of investor (in respect of a project not yet in operation), or any change to the conditions applicable to the investor.
Competent Authority and Receiving Agency for the Amendment to FDI Investment Policy Approval
Authority
The authority competent to approve the original investment policy shall have jurisdiction over any subsequent amendment thereof, which may include: the National Assembly, the Prime Minister, or the Provincial People’s Committee.
Note: Where the proposed amendment gives rise to the jurisdiction of a higher-level authority, such authority shall be responsible for issuing the approving decision.
Receiving Agencies
- Ministry of Finance: For projects falling within the jurisdiction of the National Assembly and the Prime Minister.
- Department of Finance: For projects located outside industrial zones or economic zones that fall within the jurisdiction of the Provincial People’s Committee.
- Management Board (of Industrial Zones, Export Processing Zones, High-Tech Zones, or Economic Zones): For projects situated within any of the aforementioned functional zones.
Procedure for Amendment to FDI Investment Policy Approval
Step 1: Preparation of the Dossier
The dossier for amendment to FDI investment policy approval shall include the following core documents in accordance with Decree No. 31/2021/NĐ-CP:
- A written request for project amendment (using the prescribed form).
- A report on the status of project implementation up to the date of the proposed amendment.
- A resolution or decision of the investor approving the proposed amendment.
- Supporting documents and explanatory materials for each modified element (capital, technology, location, etc.).
Step 2: Appraisal and Processing
The estimated processing timeframe varies depending on the level of the competent authority:
- For projects under the Prime Minister’s authority: Approximately 53 working days (covering inter-ministerial consultation, appraisal, and submission for approval).
- For projects under the Provincial People’s Committee’s authority: Approximately 43 working days.
- For projects under the Management Board’s authority: Approximately 18–25 working days.
Step 3: Receipt of Outcome
The competent authority shall issue a Decision on Approval of the Amendment to Investment Policy and serve as the basis for the investor to proceed with subsequent steps (such as amendment to the Investment Registration Certificate).
FAQs: Does a Change in Capital Always Require Amendment to Investment Policy Approval?
No.
Under applicable regulations, the investor is required to carry out the procedure for amendment to FDI investment policy approval only where the total investment capital changes by 20% or more AND such change results in a modification to the project’s scale. Changes in capital that are immaterial in amount or that do not materially affect the project’s scale just only necessitate the amendment to the Investment Registration Certificate (IRC).
Siglaw hopes that the information provided above will assist investors in navigating the legal roadmap for implementing their FDI projects as smoothly as possible. For further enquiries, please do not hesitate to contact Siglaw Firm for a comprehensive free consultation:
Headquarters in Hanoi: No. 44/A32 – NV13, Geleximco Area A, Le Trong Tan Street, Tay Mo Ward, Hanoi, Vietnam.
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