1. What have your clients been asking you about the restructuring, and what have you been advising them?
Answer: Many clients doing business in different sectors have approached us about this restructuring. Personally, I believe that this restructuring heavily impacts all sectors in Vietnam on different levels. Our advice provided to impacted clients varies because each client has their own problems. For example, with clients having problems with the court’s procedures due to the restructuring, we advised them that they should follow up closely with the restructuring and seek support from other competent authorities to accelerate the process if the process is delayed.
2. What are the biggest legal challenges businesses might face during this transition?
Answer: On 1 March 2025, the restructuring impacting Ministries and agencies under the Government was finalized and, as a result, there are now 14 Ministries instead of 18 Ministries like before with the merger of some then-important Ministries, including the Ministry of Planning and Investment and Ministry of Labor, Invalids and Social Affairs. I think the implementation of contracts with provisions on certain competent authorities impacted by this restructuring will be the biggest challenge for businesses, especially for provisions on merging authorities (i.e., Ministry/Department of Planning and Investment, district-level courts, Ministry/Department of Labor, Invalids and Social Affairs, Ministry/Department of Information and Communications) since these authorities no longer exist. Administrative procedures handled by impacted competent authorities could also pose a threat to the day-to-day activities of businesses in Vietnam since they can be delayed or changed in terms of location or timeline due to the restructuring. Also, with regulations of the law whereby businesses’ obligations are tied directly with certain merging authorities, entities will have to face difficulties in fulfilling their obligations during this period.
3. In your experience, which industries will be most impacted by the shifting regulatory responsibilities? Why?
Answer: I think industries will face different difficulties in this transitional period, and it is hard to assess the most impacted industry. Taking the merger of the Ministry of Finance and the Ministry of Planning and Investment for example, all enterprises established and operating under the Enterprise Registration Certificate issued by the local Department of Planning and Investment are now heavily impacted because their managing authority no longer exists without any further guiding documents. For this reason, all of their contracts and licenses will face difficulties with their validity and related procedures.
4. What are the potential consequences of eliminating district-level courts on commercial dispute resolution? Will businesses need to prepare for longer case durations at higher courts?
Answer: Longer case durations at higher courts is indeed one of the major potential consequences. Also, according to the new Law on Organization of People’s Court, cases already being handled by district-level courts can also potentially be transferred to other courts (i.e., higher courts or specialized courts). However, I believe that guiding documents will soon be issued by the Supreme Court to address the issue related to the elimination of district-level courts. Note that according to Conclusion 127-KL/TW dated 28 February of the Central Committee, the Central Committee will receive opinions from relevant stakeholders until 7 April 2025 on this matter. For the time being, all we can do is follow the new developments of this matter closely.
5. Current business licenses remain valid until they expire or certain changes occur. However, businesses may need to update registrations and obtain new permits under the restructured system. What should companies do now to stay compliant, and what considerations should they discuss with their counsel to avoid risks?
Answer: To my understanding, no compliance-related penalty should be given to businesses for violations resulting from this restructuring. I would say that businesses need to work with their counsels to proactively approach both their old and their new managing authorities to work out the best solutions going forward and to follow up closely with any changes of laws directly relating to their positions.
6. What advice do you have for companies currently operating in Vietnam and those considering establishing in the country?
Answer: For companies in Vietnam, my piece of advice is to consult your counsel closely and keep doing what you are doing. And, if you intend to invest in Vietnam, please do it as soon as possible. With this restructuring going on, I still believe that Vietnam is a dreamland for opportunity with its unmatched international integration and support from the authorities. While this restructuring can pose some compliance-related threats to businesses in Vietnam, businesses will enjoy a never-before friendly environment for investment after the restructuring since the ultimate achievement of this restructuring is to create effective and efficient operations of competent authorities.
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Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.