Legal News
New law upholds the planning formula

27 - 11 - 2017
Vietnam Investment Review

After a long delay, the Law on Planning was finally adopted by the National Assembly last Friday, making it more convenient for firms and investors to decide on their local business and investment plans. Vu Quang Cac, head of the Ministry of Planning and Investment’s Department of Planning Management, spoke with VIR’s Thanh Tung about how this law will contribute to Vietnam’s business and investment climate.

How will the Law on Planning benefit enterprises and investors, and Vietnam’s business and investment climate as well?

The law has been adopted, marking an important point in time for us to devise planning activities for the 2021-2030 period. The existing planning activities are only valid until 2020. Many experts and National Assembly members have said that the law has become an urgent matter.

The law is very significant. First, it will create a strong connection in all planning activities nationwide, because over the past many years, such activities have been stipulated in many types of laws. The Law on Planning will help establish a national-level planning system which will cover many types of planning. Second, the law creates a big breakthrough in planning, with a focus on making geographical/space-based planning. Over the past many years, many types of planning, including product-based planning, have been created. Meanwhile, product development, by nature, is determined by the market, not the state’s inclinations.

The Law on Planning has radically removed product-based planning, meaning that all business licences that go against the market-based economy will also be erased. This is a big breakthrough in reforming administrative procedures in investment and business. Simultaneously, together with the laws on Investment and Enterprises, the Law on Planning is a big step to creating a more business-friendly climate in Vietnam.

The Law on Planning also contributes to changing the existing state management model into a model in which the state will do everything in favour of the public and enterprises. The state will only make planning for indispensable infrastructure sectors, such as technical infrastructure, social infrastructure, and production infrastructure.

Over the past years, the country’s planning activities have seldom been made public. But this law covers specific regulations on the participation of the public in devising planning. After the planning document is approved, it will be announced to the public and enterprises through mass media, so that they can use it to guide their business and investment activities. Thus you can see that local and foreign investors and firms will benefit greatly from the Law on Planning.

Could you elaborate on these benefits?

The law embraces many specific specialised conditions and criteria for amending or adjusting plans. Over the past many years, Vietnam’s planning activities have often been made with a “tenure-based mindset”, meaning that a leader of one tenure can change the planning scheme made by a leader of the previous tenure. Thus the stability of planning has remained volatile.

With such conditions and criteria, the quality of the planning will be ensured, making enterprises and investors feel secure when they consider investment and business in a geographical area.

A current issue is that the “ask-give” mechanism [wherein official decisions are guided by orders rather than rule of law] undermines development and makes for unfair treatment among enterprises and investors. Do you think that the Law on Planning can help eliminate this mechanism?

I do think that this law will eradicate the mechanism. As I said above, the law stipulates specific conditions and criteria for planning schemes to be adjusted or amended. All information about the conditions and criteria are made public, so it will not be easy to change any planning personally. Over the past years, too many types of planning schemes, especially product-based planning schemes, have been created, making it favourable for officials to change planning or to list projects of localities and firms in the planning. This has tarnished the effectiveness of such planning. However, this situation will soon no longer exist. Many procedures will be cut, and transparency will be ensured.

Firms and investors are also interested in whether the Law on Planning will affect the planning of industrial products like cement, steel, and electricity. How will the law deal with this?

The law can solve this issue. It covers orientations for developing these products. For example, we will not have any planning for cement, but we will have planning for geographical areas for exploiting limestone used for making cement. This means we will focus on managing natural resources so that the resources can be used effectively and sustainably. Of course, investors or enterprises are free to determine their projects, investment capital, and locations for the projects. The issue is whether they want to implement their projects or not.

The same will be true for the development of steel and electricity. We will only manage natural resources like iron mines, and make orientations for developing power plants in specific geographical areas.

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