• In what cases does the investor have to carry out the procedures to guarantee the execution of investment projects?

Pursuant to clause 1 Article 43 of Law on Investment 2020 regulating guarantee for the implementation of investment projects, An investor must provide an escrow deposit or have a bank guarantee regarding the obligation to provide an escrow deposit as the security for the performance of an investment project requesting the State to allocate or lease out land or permit conversion of the land use purpose, except for the following cases:

a) The investor wins an auction of the land use right in order to implement an investment project for which the State allocates land with collection of land use fees or leases land with collection of one-off (lump sum) payment of rent for the whole term of the lease;

b) The investor wins tendering for implementation of an investment project using land;

c) The State allocates or leases land to the investor on the basis of receipt of the assignment of an investment project for which an escrow deposit has already been provided or for which the capital contribution or raising of capital has been completed in accordance with the schedule set out in the written IRC or investment policy approval;

d) The State allocates or leases land to the investor for implementation of an investment project on the basis of receipt of assignment of the land use right and assets attached to land from another land user.

As such, if not falling into the cases specified in points a, b, c, d, clause 1, Article 43, the investor must provide an escrow deposit or have a guarantee from a credit institution or foreign bank branch established under the Vietnamese law on deposit obligations to ensure the implementation of investment projects allocated land, leased land, or allowed to change land use purposes by the State

• What does the project execution agreement include?

Pursuant to clause 1 Article 26 of Decree 31/2020/ND-CP, the project execution guarantee agreement shall contain at least:

a) The investment project’s name, objectives, location, scale, investment capital, progress, and duration specified in the decision on approval for investment guidelines, decision on approval for both investment guidelines and investor or investment registration certificate;

b) Measures for guaranteeing investment project execution (deposit payment or guarantee for deposit payment obligation specified in Clause 1 Article 25 hereof);

c) The amount of guarantee for project execution (hereinafter referred to as “the guarantee amount”) determined as specified in Clauses 2, 3, and 4 of this Article;

d) Time and duration of guaranteeing project execution specified in Clauses 5, 6, and 7 of this Article;

dd) Conditions for refund and adjustment of guarantee amounts and termination of the obligation to guarantee project execution specified in Clause 9 of this Article;

e) Handling measures in the case specified in Clause 10 of this Article;

g) Rights, obligations, and other responsibilities of parties related to the contents mentioned in Points a, b, c, d, dd, and e of this Clause;

h) Other contents that are agreed upon by the parties but not contrary to the regulations laid down in the Law on Investment, this Decree, and relevant regulations of law.

• How is the investment project implementation guarantee rate calculated?

Pursuant to clause 2 Article 26 of Decree 31/2020/ND-CP, the guarantee rate is calculated as below:

“2. The guarantee rate is expressed as a percentage of the investment capital of the investment project on the progressive principle. To be specific:

a) For a capital portion of up to VND 300 billion, the guarantee rate is 3%;

b) For a capital portion of over VND 300 billion to VND 1,000 billion, the guarantee rate is 2%;

c) For a capital portion of over VND 1,000 billion, the guaranteed rate is 1%.”

• Whether are investors entitled to a reduction of the guarantee amount or not?

Pursuant to clause 4 Article 26 of Decree 31/2020/ND-CP, Except for the projects not eligible for investment incentives as prescribed in Clause 5 Article 15 of the Law on Investment, the investor is entitled to a reduction of the guarantee amount in the following cases:

a) a 25% reduction of the guarantee amount for investment projects in business lines eligible for investment incentives specified in the Appendix II hereof; investment projects in disadvantaged areas specified in Appendix III hereof;

b) a 50% reduction of the guarantee amount for investment projects in business lines eligible for special investment incentives specified in Appendix II hereof; investment projects in extremely disadvantaged areas specified in Appendix III hereof; investment projects in business lines eligible for investment incentives executed in disadvantaged areas.

• What is the time and duration of guaranteeing project execution?

Pursuant to clause 5 Article 26 of Decree 31/2020/ND-CP, the time and duration of guaranteeing project execution is regulated as below:

- Regarding the time, The investor shall pay the deposit or submit the credit institution’s guarantee certificate after being issued with the decision on approval for both investment guidelines and investor or decision on investor approval or decision on approval for bidding result and prior to implementing the compensation, assistance, and relocation plan approved by a competent authority (if the investor does not advance the payment for compensation, assistance or relocation) or by the time of issuing the decision on land allocation or land lease or land repurposing (if the investor does not advance compensation, assistance or relocation payments or the investor is selected to execute the project through a land use right auction and is leased out land by the State and pays land rents on an annual basis).

- Regarding the duration, The duration of guaranteeing project execution begins from the time of fulfilling the obligation as specified in Point a, Clause 5, Article 26 of Decree 31/2020/ND-CP to the time when the deposit is refunded to the investor or paid to the state budget or to the time of invalidating the guarantee.

• If there is a multi-phase investment project, is there any difference in guaranteeing the execution of the investment project?

Pursuant to clause 6 Article 26 of Decree 31/2020/ND-CP, if a project comprises multiple investment phases, the payment, and refund of the deposit amount or payment and adjustment of the guarantee amount or termination of the guarantee obligation shall be carried out in each phase of execution of the investment project under the project execution guarantee agreement. The investor may transfer the remaining deposit amount or remaining guarantee amount of the previous period to guarantee project execution for the next period without having to refund the remaining deposit amount or invalidate the guarantee of the previous period and make any additional payment of the deposit amount or guarantee amount for the next period and the deposit amount or guarantee amount of the previous period (if any).

• Where can the investor pay for the guarantee amount?

Pursuant to clause 8 Article 26 of Decree 31/2020/ND-CP, the guarantee amount shall be paid to the investment registration authority's account opened at the commercial bank established under Vietnam’s law and selected by the investor; the investor shall pay all costs incurred in connection with the opening and maintenance of the account for project execution guarantee and conduct of transactions relating to the account. 

• If the investor advances the compensation, assistance, or relocation payments to a competent authority to implement the approved compensation, assistance, and relocation plan, what are the procedures for guaranteeing the execution of the investment project?

Pursuant to clause 7 Article 26 Decree 31/2020/ND-CP, If the investor advances the compensation, assistance or relocation payments to a competent authority to implement the approved compensation, assistance, and relocation plan, follow the instructions below:

- If the advanced amount is equal to or greater than the guarantee rate prescribed in Clause 2 of this Article, the investor is not required to immediately pay the deposit amount or submit the credit institution’s guarantee certificate at the time specified in Point a Clause 5 of this Article;

- If the advanced amount is less than the guarantee rate as prescribed in Clause 2 of this Article, the investor must pay a deposit amount or submit the credit institution’s guarantee certificate, which equals the difference between the advanced amount and the guarantee rate specified in Clause 2 of this Article at the time specified in Point a Clause 5 of this Article;

- The investor with the deposit amount paid or credit institution's guarantee certificate submitted in the cases mentioned in Points a and b of this Clause must pay a deposit to the investment registration authority in accordance with this Article when the project is behind schedule according to the decision on approval for investment guidelines, decision on approval for both investment guidelines and investor or investment registration certificate.

• Within how long from the date of issuance of the Investment Policy Approval and approving the investor, the investor must contact the Department of Planning and Investment to sign an Agreement to guarantee the execution of the investment project?

The investor is responsible for contacting the Department of Planning and Investment to sign the Agreement to guarantee the execution of the investment project within 60 days from the date of issuance of the Investment Policy Approval and approving the investor.