Decentralization of Investment Project Approval: Meaning & Impact

Overview of the Investment Decentralization Policy

In recent years, Vietnam has strongly promoted administrative reform in the investment sector, with a key focus on decentralizing the authority to approve investment projects to provincial governments and Management Boards of Industrial Parks (IPs), Export Processing Zones (EPZs), Economic Zones (EZs), and High-Tech Zones.

This policy is clearly regulated in:

• Law on Investment 2020, amended and supplemented in 2024

• Decree No. 31/2021/NĐ-CP guiding the implementation of the Law on Investment

• Guidance documents issued by the Ministry of Planning and Investment (MPI)

👉 This decentralization plays a strategic role in improving the investment environment, attracting FDI, and accelerating local industrial development.

What Is the Decentralization of Investment Approval Authority?

Decentralization means transferring part of the investment approval authority from central government to local authorities, allowing:

• Provincial People’s Committees

• Industrial Park & Economic Zone Management Boards

to directly appraise, approve, and adjust many types of investment projects.

Accordingly:

• The National Assembly and the Prime Minister only approve large-scale, sensitive projects with national impact.

• Most manufacturing, logistics, factory leasing, and industrial park projects are handled at the provincial level.

What Is the Significance of Decentralizing Investment Approval Authority?

1. Shortening Investment Licensing Time

Previously, many projects had to be submitted to central authorities, leading to 30–60 working days or more for approval.

Now, with decentralization:

• Average processing time is reduced to 10–20 working days.

• Investors can deploy projects faster and reduce opportunity costs.

👉 This is a critical factor in attracting FDI, especially from Japan, South Korea, China, the EU, and the US.

2. Enhancing Local Autonomy and Industrial Planning Efficiency

Local authorities and IP Management Boards better understand:

• Land-use planning

• Infrastructure capacity

• Industrial development orientation

• Local labor conditions

This enables:

• More practical investment decisions

• Optimized industrial zoning

• Reduced project suspension and planning conflicts

3. Accelerating Industrial Growth & FDI Attraction

Decentralization empowers provinces to:

• Actively promote investment

• Flexibly adjust project parameters

• Provide faster investor support

👉 Key industrial provinces such as Ho Chi Minh City, Binh Duong, Dong Nai, Long An, Bac Ninh, Hai Phong are effectively leveraging this policy to boost industrial real estate development.

4. Improving Regulatory Supervision & Post-Investment Monitoring

Local authorities can closely monitor:

• Capital contribution

• Construction progress

• Environmental compliance

• Fire prevention and safety

• Labor regulations

👉 This helps reduce violations, prevent speculative projects, and improve overall investment quality.

5. Reducing Administrative Burden on Central Government

Decentralization allows:

• Central ministries to focus on macro-level strategy and policymaking

• Improved national coordination and planning

• Reduced processing overload

Which Projects Are Decentralized?

According to the Law on Investment 2020 and Decree 31/2021/NĐ-CP:

👉 Most industrial factory leasing and production projects fall under provincial authority.

Strategic Implications for Enterprises & FDI Investors

For domestic enterprises and FDI investors, decentralization offers:

• Faster administrative procedures

• Lower compliance costs

• Easier project expansion

• More flexible investment adjustments

👉 This significantly enhances Vietnam’s competitiveness in attracting global investment flows.

Conclusion

The decentralization of investment project approval authority is not merely an administrative reform but a long-term economic development strategy, enabling:

✔ Faster investment processing
✔ Higher-quality FDI attraction
✔ Sustainable industrial zone development
✔ Improved public governance efficiency

Official References

• Law on Investment 2020 (amended 2024) – National Assembly of Vietnam

• Decree No. 31/2021/NĐ-CP – Government of Vietnam

• National Public Service Portal: https://dichvucong.gov.vn

• Ministry of Planning & Investment: https://www.mpi.gov.vn