Desiring a favorable space and resources to develop potential projects, the investors always expect “fine and dandy” incentives from the state. Following to the changes of the Law on Investment 2020, Decree No. 31/2021/ND-CP (“Decree 31”) has specified important incentive mechanisms and policies, creating motivations for the oriented process of attracting investment that the investors should follow.

Specifying projects eligible for investment incentives

In order to encourage correct objects according to orientation, Decree 31 “zoning” to supplement and clarify a number of objects eligible for incentives under the Law on Investment 2020:

• projects in new business lines with investment incentives: manufacturing (1) biotechnological products used as food; (2) wooden, artificial boards products; (3) building materials that recycle excess heat, exhaust gases, etc., in order to promote scientific application, sustainable development and environmental friendliness.
• projects in new areas in Bac Kan, Ha Giang, Dien Bien provinces and some districts in provinces Vinh Long, Dong Thap, Kien Giang, Ben Tre, Lam Dong, etc., in order to support the development of socio-economic conditions in such difficult or especially difficult localities.
• projects employing people with disabilities must reach at least 30% of regular employees annually, in order to create jobs for disabled workers.
• product distribution chain of small and medium-size enterprises to consumers must have at least (1) 80% of the members being small and medium-size enterprises, (2) 10 distribution locations, (3) 50% revenue generated by small and medium-sized enterprises participating in the distribution chain, in order to provide support to the right objects in these types of enterprises.

Inheritance of incentives: no longer just a principle

Previously, the law on investment only declared that new investors of a project due to enterprise reorganization or division, merger and acquisition of project would inherit the investment incentives of such project. However, the reticence of lawmaker makes the application of this general regulation be difficult. Therefore, Decree 31 has defined the specific framework for the principle as follows:

• new investors can only inherit incentives if they still satisfy the eligibility conditions;
• post-division projects are only eligible for incentives for the remaining incentive period of the pre-division project;
• post-merger projects may continue to enjoy incentives according to the eligibility conditions of each pre-merger project if they still satisfy the conditions for the remaining incentive period.

Although not changed much in comparison with the previous regulations, the investment incentive mechanism in Decree 31 reflects the orientation of attracting investment with focus. It promises to support investors to somewhat “lighten the burden” in the implementation of projects for sustainable development in Vietnam, bringing a mutually beneficial relationship for the parties.