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Southeast Asia

Apr 21, 2005

Vietnam crafts unified enterprise law

HANOI - Vietnam, where current laws deal with domestic and foreign investors separately, is building a unified enterprise law for such investors in order to meet World Trade Organization requirements.

Although these laws are quite liberal already, combining them has involved more than just cutting and pasting.

The draft Unified Enterprise Law encompasses four types of enterprises - limited liability, share holding, partnership and sole proprietorship. It simplifies market entry and abolishes the 30% cap on foreign ownership in local companies.

Under the draft law foreign investors will simply register their businesses, instead of applying for licenses, giving them the same rights as local investors.

But some industries will be off limits to foreign investors, who must invest at least US$100,000 in any industry.

Some provisions in the draft are controversial. A single foreign investor can form a 100% foreign-owned company in Vietnam, but a single domestic individual can't.

Lawmakers argue that in fact most multi-member companies in Vietnam were set up by one person who asked his or her spouse or other relatives to be the other members.

The new law would not govern the operations of state-owned companies, which have to be changed into limited liabilities or share holding companies before the law can take effect.

(Asia Pulse/VNA)

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