FDI firms to get unexpected inspections (05/08/2017)
Firms operating in Việt Nam with foreign direct investment (FDI) will be subjected to regular and sudden examinations by appropriate Vietnamese authorities of their financial assets, according to the recently issued Decision 1381/QĐ-BTC by the Ministry of Finance (MoF).
The decision regulates joint inspections of FDI businesses, regarding asset values of land and real estate, machinery and other tangible assets, as well as intangible corporate assets (i.e. licensing, lease, franchise agreements or employment contracts).
This is considered a step up from the usual treatment of regulated annual examinations and notifications from Vietnamese authorities towards FDI firms. This is intended to expose and stop perceived malpractice by FDI firms,
State agencies may conduct regular or sudden examinations and oversight of the implementation of FDI projects by foreign investors, covering the legal compliance of FDI enterprises, their commitments to the Vietnamese government, and the firms’ actual implementation and achievements.
Decision 1381 states that annual examinations should take place in October, while the Agency of Corporate Finance under the MoF will join forces with the MoF’s Inspectorate to compose next year’s inspection plan, which will then be submitted to the MoF and the Ministry of Planning and Investment (MPI) before November 30 of the same year.
Vietnamese authorities will now also be able to examine the use and purpose of imported goods under tangible assets owned by those exempt from import tax, the disbursement of commercial bank loans and corporate bonds, or devaluation of tangible assets based on exchange rate fluctuations.
Some other areas in need of inspection include FDI firms’ implementation of capital transfer between stakeholders within the same firm and division of turnover from State capital.
Further investigations are included for other corporate responsibilities such as environmental protection, labour rights and social insurance, as well as safe and sustainable use of land and resources in accordance with the national legal framework.
Effective use and commitment to agreed technological transfer will also be included to ensure that the FDI firm in question may continue to receive the preferential treatment given under the projects’ contract.
The Foreign Investment Agency reported that as of July 20, up to US$21.93 billion in FDI has flown into Việt Nam, up by 52 per cent against the same period last year.
The FDI sector is a key exporter for the country, as during the last seven months overseas shipments from the sector have been valued at $83.05 billion, representing a year on year surge of 20.3 per cent and accounting for 72 per cent of total export turnover.