Vietnam passes new law to boost foreign investment in key oil sector HANOI - The Vietnamese parliament has approved new legislation designed to boost foreign investment in the country's key oil and gas sector, official newspapers reported Thursday. The new law comes just a day after MPs approved a new general law on foreign investment designed to stem a drastic decline in foreign investment approvals from eight billion dollars in 1996 to just 1.5 billion last year. Full details of the 17 new measures, which were approved in a closed door session Wednesday, will not be released until the legislation has been ratified by state President Tran Duc Luong. But in an interview with the leading official daily Nhan Dan (The People), the chairman of the government office, Doan Manh Giao, played down expectations, saying "only some articles and provisions, which are imperative, were amended." He gave no details of the amendments but said they were "aimed at creating a favourable legal environment and increasing Vietnam's attractiveness to investors." Parliamentary reports in the official press said the bulk of the government's proposals to revive declining interest in the country's upstream sector were approved without opposition from communist legislators. The new law, which comes into effect on July 1, will set statutory rates of return for foreign firms working in Vietnam's offshore oil and gas fields which should allow them to recover initial capital costs of exploration and drilling more quickly, they said. Investors in deep-sea fields will be allowed to set aside 70 percent of production to cover start-up costs and those in coastal fields 50 percent, the English-language Vietnam News said. Previously investors and contractors had to agree the rates of return between themselves on a case by case basis -- typically between 35 and 40 percent of start-up costs, according to the economic weekly Vietnam Investment Review. The new legislation also reduces tax levels for companies working in deep-sea fields to 32 percent, compared with 50 percent at present, in a bid to compensate for the difficulties of exploiting those fields. Restrictions on foreign companies' ability to raise and repatriate capital will also be eased, Vietnam News said. High hopes for Vietnam's oil and gas sector in the early 1990s led to a string of exploration deals in offshore fields in the South China Sea. But lower than expected oil finds and continuing bureaucratic obstacles to gas exploitation have led all but a handful of firms to abandon their upstream operations here. AFP - May 18, 2000.