However, an official from the HCM City Department of Planning and Investment insists, without any clear basis, that he has to complete the same investment procedures as any foreign investor. Disappointed with the response, Nam gave up.

His case is not an exception. Before the Investment Law first took effect on July 1, 2006, the Domestic Investment Promotion Law offered the same treatment to overseas Vietnamese and locals who do business in the country. The Communist Party also considers overseas Vietnamese as an integral part of the Vietnamese people. Article 7 of the Citizenship Law clearly holds that the Socialist Republic of Vietnam encourages and provides incentives for overseas Vietnamese to maintain ties with their families and country for the purpose of national development.

However, the legal status of overseas Vietnamese has become murkier since the Investment Law came into effect. It remains unclear whether they are considered local or foreign investors. On June 18, 2009, the prime minister issued Decision 88/2009/QD-TTg, which defines foreign individuals as "those who do not have Vietnamese citizenship and who reside in Vietnam or overseas." However, Decision 12l/2008/QD-BTC dated December 24, 2008, issued by the minister of Finance, stipulates that foreigners include those of Vietnamese origin but with foreign citizenship.

Some departments of planning and investment have based their decisions on these regulations and consider those who have not kept their Vietnamese citizenship or who have adopted foreign citizenship as foreigners. The problem is that Decision 88/2009/QD-TTg pertains merely to capital contributions from and share purchase by foreign investors in Vietnamese enterprises, while Decision 12l/2008/QD-BTC aims mainly to govern the activities of foreign investors in Vietnam's stock market.

The HCM City Department of Planning and Investment has sought the Ministry of Planning and Investment's advice on this matter. In response, the ministry issued Official Letter 486I/BKH-PC on July 3, 2009, which was based on a largely irrelevant regulation (Clause 5, Article 3, the Investment Law) and stipulated that (a) investors without Vietnamese citizenship are treated as foreigners and that (b) foreign investors with Vietnamese citizenship can choose to be treated as foreigners or locals. It admits that the official letter is merely a temporary solution, pending new regulations. Even then, it remains unclear what documents are required to prove whether an investor still has Vietnamese citizenship.

Enterprises set up by overseas Vietnamese in accordance with the Domestic Investment Promotion Law are also affected. Tran Thanh Tung from P&P Co. says that one such enterprise in Vinh Long cannot set up a new firm to undertake a project as the local department of planning and investment considers this business a foreign investor. In contrast, Dr Nguyen Quoc Vinh from the Academy of Justice says that a similar enterprise in Dong Nai is considered a local investor when applying to purchase shares in a Vietnamese enterprise.

Overseas Vietnamese face enormous hurdles if considered foreign investors, who must spend months or even an entire year carrying out administrative procedures that take local investors only five to seven days to complete. In addition, unlike their local peers, foreign investors must submit audit reports. Identifying the legal status of overseas Vietnamese is therefore a crucial task.

The Saigon Times Weekly - May 7, 2010