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Security ministry to gain vetting powers on investment

projects

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Plan concerns critical projects and also golf, industrial

parks

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Investor-reliant Vietnam has faced criticism over slow

approvals

By Francesco Guarascio and Khanh Vu

HANOI, Sept 18 (Reuters) - Investors in Vietnam in

energy, telecommunications, construction and other sectors, will

need police approval for projects, under a major reform meant to

boost security and ensure the "absolute leadership" of the

ruling Communist Party, a draft decree says.

The proposed text from the public security ministry, which

is still subject to changes, could increase compliance costs for

business in the Southeast Asian nation while significantly

expanding the powers of the security apparatus.

"In socio-economic development, security must be ensured,

without sacrificing national interests for economic benefits,"

said the proposal published on the security ministry's website,

which other ministries can comment on until September 22.

It could then be signed into law by the prime minister

provided no major changes are requested.

Export-reliant Vietnam is highly dependent on foreign

investors and currently conducts limited security checks on most

development projects, giving the police largely a consulting

role. It is unclear how extensively the new rules would be

applied, if approved, and whether they would concern only future

projects.

In a separate explanatory document, the ministry said the

new provisions were necessary to deal with a more complex

international situation dominated by strategic competition meant

"to increase the sphere of influence of strong countries,"

without specifying which nations.

The ministry did not reply to a request for comment.

In Communist-run Vietnam, police already play a crucial role

beyond security, encompassing a major influence on legislation

and growing interests in the economy. The party leader and

Vietnam's most powerful man, To Lam, headed the security

ministry before moving to the top job. Separately, the army

oversees a wide array of businesses, including banks and the

largest telecom operator Viettel.

The planned reform would give the security ministry the

power to vet development projects on security grounds for a

broad variety of critical infrastructures like nuclear power

plants, telecommunication and satellite services with foreign

involvement, ports and oilfields.

U.S. companies SpaceX and Amazon are planning to launch

their satellite communication services in Vietnam.

GOLF PROJECTS TO BE VETTED BY POLICE

Seemingly less critical operations would also need the

ministry's approval, including industrial parks and golf

courses, according to the draft document.

Vietnam plans to expand its golf industry from nearly 100

courses at present, according to Vietnam Golf Association. The

family business of U.S. President Donald Trump is partnering

with a local developer on a large golf resort to be built close

to Hanoi.

The country is also home to huge industrial operations of

multiple multinationals, including South Korea's Samsung

Electronics ( SSNLF ), Japan's Honda ( HMC ) and U.S.

chipmaker Intel ( INTC ), which are attracted by low labour

costs but have at times voiced concerns over slow project

approvals.

The ministry, supported by national and local police forces,

will establish whether yet-to-be-defined security conditions are

met for projects to go ahead, including those involving foreign

investors, according to the draft proposal.

A Vietnam-based legal consultant, who declined to be named

to speak more freely, said the decree would effectively give the

police the power to veto projects, and noted some companies had

expressed concerns about the draft document, fearing it could

increase compliance costs and delay projects.

Other corporate, diplomatic and legal representatives

contacted by Reuters about the draft decree did not comment,

with some declining to discuss the matter because of the

sensitive nature of the issue or due to lack of clarity around

the proposed rule.

Under the proposal, the security ministry will also develop

a mechanism to supervise and inspect foreign aid projects and

will "comprehensively appraise the impacts on security, social

order and safety on foreign-invested projects, implemented in

many key localities and areas, where many labourers and workers

live," the document says.

A similar decree was implemented in 2019 to guarantee

defence priorities were taken into account for economic

projects, but gave the army less explicit powers and was more

limited in its scope.