The legal status of overseas Vietnamese who seek to invest in Vietnam remains ambiguous and, these Viet Kieu point out, that uncertainty has hindered their investment in their former homeland.

Dr. Nguyen Van Nam, a Viet Kieu from Germany, told reporters from Thoi Bao Kinh Te Saigon that that several years ago, he and some Vietnamese friends planned to set up an informatics service company in HCM City. However, his hopes were dashed even after he contacted the local investment and planning department five times. Disappointed and angry, Nam gave up the project.

Many other Viet Kieu who have tried to invest here since July 1, 2006 have met the same problem. The current Investment Law went into effect on that date, and it is unclear on whether Vietnamese who have taken the citizenship of other nations can be considered ‘Vietnamese nationals’ for purposes of investment in Vietnam.

Prior to that date, under the predecessor Law on Domestic Investment Promotion, besides some tax and land incentives, Viet Kieu investors were treated as Vietnamese citizens when they set up a company and invested in Vietnam, meaning that they were able to get established with far fewer administrative procedures.

Article 7 of the Law on Nationality says quite clearly that “the Socialist Republic of Vietnam’s policy is to encourage, and create favorable conditions, for people of Vietnamese origin who are settled abroad to maintain a close relationship with their families and land of origin (quê hương), to play a part in its development . . .

Even so, different offices in different provinces have interpreted the new Law on Investment differently.  In some places, considering Viet Kieu as domestic investors, planning and investment departments only ask them to register their business like domestic investors.  However, planning and investment departments in some provinces and cities have required Viet Kieu who carry other countries’ passports to follow administrative procedures applicable to foreign investors.

Finance Ministry Decision No 121, dated December 24, 2008, of the Ministry of Finance, stipulated that foreign investors are those who hold foreign citizenship, whether residing in foreign countries or in Vietnam, including people of Vietnamese origin who hold foreign citizenship.

Further, on June 18, 2009, the Prime Minister released Decision No 88, which defines foreign individuals as “people who do not have Vietnamese nationality, whether living in foreign countries or in Vietnam.”

Apparently these Decisions have not solved the problem for local planning and investment departments.  Some offices take them at face value: Viet Kieu are considered foreign investors when they have foreign citizenship.  Other offices point out, however, that the coverage of the legal documents is limited. For example, Decision No 88 only addresses the capital contribution of foreign investors in Vietnamese enterprises.  Decision 121 only addresses the activities of foreign investors on Vietnam’s stock market.

Adrift, the HCM City Planning and Investment Department asked the Ministry of Planning and Investment (MPI) for guidance. On July 3, 2009, the ministry replied in Official Letter #4861.  However, MPI’s ‘provisional answer’ was based on Article No 3 of the Investment Law, which actually is hardly related to the issue.

According to the ministry, if investors no longer hold Vietnamese nationality, they will be treated as foreign investors. In case the investors still have Vietnamese nationality, they will have the right to choose either to be treated as domestic or foreign investors.

Analysts say the ‘provisional’ MPI guidance does not give clear guidelines about ‘still have Vietnamese nationality’ or ‘do not have Vietnamese nationality any more.’  Neither does the July 3, 2009 document say what documents may be presented by overseas Vietnamese to prove their nationality.

According to Thoi bao Kinh te Vietnam, not only Viet Kieu who have recently returned to Vietnam to make investment meet difficulties, but also Viet Kieu who have already established enterprises under the previous Law on Domestic Investment Promotion.

Lawyer Tran Thanh Tung of the P&P Law Firm related that a company in Vinh Long province could not implement its investment project because they were considered as foreign investors and therefore must first obtain an approved investment certificate.

Meanwhile, according to Dr Nguyen Quoc Vinh, who lectures at the Justice Institute, some Viet Kieu have been treated as domestic investors when they purchase stakes in Vietnamese enterprises.

The Viet Kieu of course prefer to be treated as domestic investors instead of foreign investors. “As domestic investors, they only have to spend five to seven days to register a business,” Tung explains. “Meanwhile, as foreign investors, it will take them months, perhaps years, to obtain a lot of different documents.”

“The books of foreign invested enterprises must be audited and reported annually, while if you have a domestic enterprise, you don’t have to,” he added.