LA CAPACITE D’ABSORPTION DES INVESTISSEMENTS DIRECTS A L’ETRANGER (IDE) DU VIETNAM – PERSPECTIVES DE L’ACCORD DE LIBRE-ECHANGE ENTRE L’UNION EUROPEENNE ET LE VIETNAM (ALE UE-VN)

 

Le Vietnam a cherché à attirer les IDE en réduisant l’impôt sur les sociétés pour certains secteurs privilégiés, en abaissant le taux normal d’imposition de 25% à 10-20% et en renonçant aux redevances sur les sols pour les entreprises à participation étrangère. Les IDE sont principalement promus pour les transferts de technologie qui leur sont inhérents. Malgré le nombre toujours croissant d’IDE au Vietnam, les effets indirects se font toujours attendre pour trois raisons : le manque de liens en amont, la distance géographique et le problème de la capacité d’absorption des IDE.

Le premier problème concerne le manque de liens en amont des entreprises vietnamiennes. Plus de la moitié des entreprises à participation étrangère importe des apports de leur pays d’origine ou de pays tiers, d’après plusieurs facteurs : la forme du fournisseur, le secteur et le pays d’origine.

Les entreprises à participation étrangère sont le plus souvent servies par des fournisseurs privés et des importateurs, bien que le pourcentage d’entreprises à participation étrangère selon les types de fournisseurs varie dans chaque secteur. Les secteurs de la finance et des services requièrent le plus de liens en amont puisqu’ils reposent sur le capital humain. Dans les secteurs manufacturier et minier, les entreprises à participation étrangère  importent plus de la moitié des apports d’un autre pays.

En outre, les entreprises à participation étrangère diversifient de plus en plus leurs sources d’apport ce qui dénote un changement de stratégie indépendant des incitations qu’ils pourraient recevoir. Les types de fournisseur sont plus divers qu’auparavant : en 2 ans, les entreprises à participation étrangère servies par des fournisseurs privés locaux sont passées de 45 à 68% et de 10 à 20% pour celles servies par des fournisseurs familiaux… les fournisseurs internes sont les seuls à voir leur nombre décroître.

Les nombreuses incitations tendent à promouvoir les IDE dans le secteur de la haute technologie, dans certaines régions défavorisées et dans d’autres secteurs prioritaires, mais la question de la réalité des transferts de technologie doit se poser. En effet, les incitations visent des régions et des secteurs qui ne sont pas prêts à recevoir de telles technologies et ainsi les IDE placés dans les régions plus favorisées ne reposent pas sur des incitations.

A travers les différentes provinces, les principaux secteurs déterminent les fournisseurs des entreprises à participation étrangère selon la complexité de la technologie liée à l’activité. Les fournisseurs vietnamiens forment plus facilement des liens en amont avec des entreprises à participation étrangère dans les secteurs de basse technologie ou l’écart de technologie n’est pas rédhibitoire.

Ainsi, plus de liens se forment avec les entreprises taiwanaises fondées sur le textile, la fabrication et l’électronique légers, qu’avec les industries japonaises ou coréennes spécialisées dans l’électronique complexe. Les entreprises à participation étrangère ne sont pas soumises à l’obligation du transfert de technologie ce qui empêche les entreprises vietnamiennes de rejoindre la chaîne logistique de la haute technologie et donc d’établir des liens plus en amont.

Par ailleurs, la distance géographique entre le siège des entreprises à participation étrangère et celui des entreprises privées locales doit être sérieusement prise en considération dans la mesure où le transfert de technologie ne peut avoir lieu qu’au cours de consultations techniques en face-à-face. Pourtant, il est difficile de distinguer l’impact entre distance géographique et transfert de technologie avec la stratégie voulue par l’entreprise.

Dans tous les cas, la proximité influence grandement le choix de la stratégie et permet de favoriser le transfert de technologie. L’établissement d’une société privée locale dans une zone industrielle augmente l’efficacité de l’export mais diminue les chances de transfert de technologie en isolant l’entreprise à participation étrangère d’un centre économique plus étendu.

Enfin, la capacité d’absorption des IDE facilite d’autant plus le transfert de technologie. En tout état de fait, lorsque l’écart de technologie est trop important entre les entreprises locales et à participation étrangère dans les domaines des nouvelles technologies et de formation de la main d’œuvre,  le potentiel de transfert est inversement réduit.

Pour ce qui est de la qualité de la main d’œuvre, les entreprises d’Etat ont un plus grand pourcentage de personnel qualifié tandis que les entreprises privées ont une main d’œuvre moins qualifiée. Les fournisseurs locaux des entreprises à participation étrangère ont moins de chance d’apprendre de leurs clients étrangers pour cause de la capacité limite d’absorption des IDE. L’amélioration de la qualité du personnel est l’élément clé dans l’encouragement du transfert de technologie par les entreprises à participation étrangère, les liens en amont et la proximité géographique ne permettant que d’accentuer la prise de contact et les effets indirects.

Les perspectives de l’ALE UE – VN

Actuellement, le Vietnam connaît une période propice à l’investissement en étant l’un des seuls pays de l’ASEAN à avoir signé un accord de libre-échange avec l’UE (à l’exception de Singapour qui a signé en 2014 mais concernant des marchés très différents liés à la machinerie, aux produits chimiques et à l’équipement de transport).

D’après les provisions de l’accord, plus de 99% des barrières tarifaires vont être éliminées dans les 7 ans à compter de l’entrée en vigueur de l’ALE. Les obligations du Vietnam sur le marché européen vont disparaitre sous 10 ans, et celles de l’UE sur le marché vietnamien sous 7 ans pour certains produits expressément nommés (motos, pièces automobiles, certains produits pharmaceutiques). L’ouverture des marchés vont favoriser les relations commerciales entre l’UE et le Vietnam et profiter aux deux. Les engagements du Vietnam à l’OMC et à des (sous-)secteurs additionnels tels que les services infirmiers, les services de conditionnement etc. offrent la garantie du meilleur accès possible au marché vietnamien.

Pour le secteur de la distribution, un test des besoins économiques est requis, tel que d’après l’OMC, mais ajoute des exceptions et limite a cinq ans la condition du test à partir de la date d’entrée en vigueur de l’accord. Ainsi après cinq ans,  la condition du test des besoins économiques sera supprimée.

Le Vietnam est le lieu le plus rentable d’investissement en ASEAN et est voué à conserver cette position en partie grâce à l’ALE entre l’UE et le Vietnam. Le développement stable de l’économie, le contrôle de l’inflation ainsi qu’une législation adaptée font du Vietnam un environnement adapté à l’investissement.

Les recommandations les plus importantes

  • Etudier la forme de fournisseur la plus adaptée au regard de la complexité de son activité
  • Choisir la stratégie adéquate à adopter entre percevoir des incitations mais ne pas former de liens en amont, ou établir des liens avec les entreprises locales et renoncer aux incitations.
  • Décider du moment d’investir : le Vietnam présente de nombreuses opportunités c’est pourquoi les investisseurs devraient se positionner aussi tôt que possible pour saisir ces opportunités notamment lors de l’entrée en vigueur de l’ALE entre l’UE et le Vietnam.
  • Faire attention à la législation récemment adoptée : le Gouvernement cherche à améliorer l’environnement commercial à travers des reformes en particulier après l’adoption de nouveaux traités (la Loi sur l’Investissement, Loi sur les Entreprises, Décret sur les Partenariats Public-Privé).

***

N’hésitez pas à contacter M. Oliver Massmann à l’adresse omassmann@duanemorris.com si vous avez la moindre question sur ce qui a été dit, Oliver Massmann est le Directeur Général de Duane Morris Vietnam LLC.

Merci beaucoup !

RENOUVELLEMENT, PROROGATION ET REFINANCEMENT : NOUVELLE REGLEMENTATION DU PRET AU VIETNAM

Il y a quelques années, la Banque d’Etat du Vietnam (« BEV ») a pris l’habitude de célébrer la nouvelle année en tirant une salve de nouvelles règles durant les derniers jours de travail de l’année. Cette année ne fut pas différente, excepté que cette salve s’est prolongée au-delà des vacances du Nouvel An Lunaire. Le 9 Février 2017, la BEV a publié sur son site internet les deux dernières circulaires datées du 30 Décembre 2016. Ces nouvelles règlementations sont très importantes pour le système bancaire du pays et pour l’économie en général, en ce qu’elles ont vocation à refondre le cadre applicable aux activités de prêt des établissements de crédit(*) et des succursales des banques étrangères au Vietnam (désormais, banques). Bien que cela prendra du temps pour les banques et leurs clients de complètement analyser l’impact du nouveau régime des prêts, nous croyons que les trois changements suivants introduits par la première des deux circulaires – la Circulaire 39/2016/TT-NHNN sur les activités de crédit des établissements de crédit et des succursales des banques étrangères (« la Circulaire 39 ») – sont les plus significatives.

I.                   Prêts renouvelables et prorogation des contrats de prêt

Même s’il s’agit de quelque chose d’assez courant dans d’autres marchés, ces deux pratiques bancaires internationales (revolving credit et roll-over of loans) n’ont jamais été formellement permises au Vietnam. La Circulaire 39 va permettre aux emprunteurs ayant des cycles commerciaux n’excédant pas un  (1) mois d’obtenir le renouvellement de leurs facilités de crédit des banques jusqu’à trois (3) mois. Les prorogations vont aussi être possible à condition que l’emprunteur n’ait pas de prêt non-productif et que la durée totale des prêts prorogés n’excède pas 12 mois à partir du premier décaissement et n’excède pas un cycle commercial de l’emprunteur.

II.                Refinancement

Comme pour les prêts renouvelables ou les prorogations de contrats de prêt, le refinancement n’était pas autorisé au Vietnam, dans le passé. Le refinancement de prêts transnationaux a d’abord été autorisé en 2014(**). La Circulaire 39 va, désormais, permettre également le refinancement des prêts domestiques, à condition que les conditions suivantes soient remplies : (i) les prêts refinancés ne sont autorisés que dans le cadre d’activités commerciales (les prêts à la consommation restent ainsi exclus du refinancement) ; (ii) l’échéance du refinancement ne doit pas excéder la durée résiduelle du prêt refinancé ; et (iii) le prêt refinancé ne doit pas avoir été restructuré. Notons qu’il est toujours interdit à une banque d’étendre un nouveau prêt pour refinancer un autre crédit accordé par cette même banque.

III.             Droits renforcés du préteur

La Circulaire 39 fait un effort pour renforcer la protection des banques comme créanciers. Par exemple, les banques ont, maintenant, le droit de recouvrir les crédits impayés même après avoir épuisé toutes les méthodes de recouvrement de créance prévues (e.g. vente d’actifs garantis). Les banque pourront aussi demander l’indemnisation pour les dommages causés par les inexécutions du contrat de prêt, en plus des intérêts moratoires (à condition que le principe d’indemnisation pour inexécution contractuelle entre dans le champ contractuel du contrat de prêt suivant accord des parties). Les banques vont également avoir une plus grande liberté pour accepter de réduire ou de renoncer aux intérêts et frais.

La Circulaire 39 entrera en vigueur dans un mois, le 15 Mars 2017, et remplacera la Décision 1627/2001/QD-NHNN du 31 Décembre 2001 sur le régime des prêts accordés par les établissements de crédit, amendée à de multiples occasions par la BEV durant les 15 années de son exécution. Avec ces changements assez positifs, la BEV espère assurer que le crédit continue de croitre, en dépit d’un environnement global et macro-économique national complexe, pendant que les prêts non productifs sont gardés sous contrôle. Que la Circulaire 39 permette d’atteindre ces objectifs reste à prouver.

 

(*) Le terme « établissement de crédit », au Vietnam, inclut les banques commerciales, les établissements financiers non bancaires (principalement des sociétés financières), des établissements de micro-crédit et des fonds de crédit populaires.

(**) La Circulaire de la BEV 12/2014/TT-NHNN du 31 Mars 2014 sur les conditions applicables aux emprunts étrangers non garantis par le Gouvernement des entreprises.

 

Pour plus d’informations, veuillez-vous adresser au Partner Giles Cooper à gtcooper@duanemorris.com ou au Special Counsel Bach Duong Pham à dbpham@duanemorris.com.

 

Anwalt in Vietnam Oliver Massmann BANKEN UND FINANZIERUNG AUSBLICK ZUM EU – VIETNAM FREIHANDELSABKOMMEN (EVFTA)

Das stetige Wachstum Vietnams wird bestätigt durch zahlreiche makroökonomische Daten wie der Anstieg des Bruttoinlandsprodukts um 5,93 Prozent, einen Einkaufsmanagerindex im September 2016 von bis zu 52,9 Punkten und außerdem eine steigende Zahl von ausländischen Direktinvestitionen.

Darüber hinaus ist Vietnam in einer privilegierten Situation von kontrollierter Inflation, politischer Stabilität und stabiler makroökonomischer Umwelt und hat somit die besten Perspektiven für eine gesunde Weiterentwicklung. Die Staatsbank von Vietnam (SBV) wird die makroökonomische Situation weiter stabilisieren, indem sie die Zinssätze senkt, Fremdwährungskredite an Exporteure anbietet, um lokale Ausgaben zu bezahlen und die risikogewichteten Aktiva für Kredite im Immobiliensektor erhöhen wird.

Makroökonomische Fragen

Die vielfältige Anzahl von Infrastruktur- und Immobilienprojekten zeigt das Aufleben des Immobilienbereichs und begründet die hierfür gewährten Kredite in den vergangenen Jahren. Auch wenn sich der Anteil von sog. leistungsgestörten Krediten (engl. Non Performing Loans) bei Banken vermindert, empfiehlt es sich den Kreditverpflichtungen der Banken im Zusammenhang mit dem Immobilienmarkt mehr Aufmerksamkeit zu widmen, um Insolvenzsituationen zu vermeiden.

Darüber hinaus muss der Interbankenmarkt entwickelt werden, um eine relevante Markt-Benchmark zu ermitteln. Es ist notwendig, die bestehende langfristige Zinsstrukturkurve neu zu bewerten, um das Scheme of Money Market zu integrieren und einen kurzfristigen Zinskurven-Benchmark einschließlich derivativer Produkte zu erstellen. Darüber hinaus werden die VietNam InterBank Offered Rates (VNIBOR) über lokale Banken übertragen, während ein Beitrag der Vietnamesischen Staatsbank die wahren Marktschwankungen widerspiegeln.

Außerdem sollte die Vietnamesische Staatsbank Cash-Management-Produkte entwickeln, um den internationalen Anforderungen gerecht zu werden. Das Fehlen von Vorschriften, die Cash-Management-Produkte, z.B. Cash-Sweeping, Pooling-System, oder Kredite innerhalb von Unternehmen, schaffen Einkommensdefizite für Banken, die dementsprechend solche Dienste für ihre Kunden nicht anbieten können.

Technische Fragen, die die Intervention der Vietnamesischen Staatsbank erfordern

Die Umstrukturierung des Bankensystems während des Zeitraums 2016 bis 2020 durch die Vietnamesische Staatsbank sollte die Änderung des Rundschreibens Nr. 36/2014 / TT-NHNN vom 20. November 2014 über Mindestsicherheitsgrenzen und Quoten für Transaktionen von Kreditinstituten und Zweigniederlassungen ausländischer Banken umfassen. Tatsächlich verpflichtet das Rundschreiben Nr. 36 die Kreditinstitute, Informationen über verwandte Personen zu überprüfen, um die Kreditlimits zu kontrollieren, bieten aber keine Vorkehrungen, wie diesbezüglich relevante Personen in Übereinstimmung mit internationalen Standards identifiziert werden können.

Die Vietnamesische Staatsbank sollte dann Banken und Kunden in diesen Angelegenheiten führen, sowie Beschränkung für die Ausweitung von Krediten für Kreditkarten beseitigen. Solange für Banken sichergestellt wird, dass der Kreditnehmer den Restbetrag vor der Fälligkeit bezahlen kann, sollten Kreditrahmen-Erweiterungen für Kreditkarten zugelassen werden.

Die Vietnamesische Staatsbank sollte ebenfalls Aktivitäten im Bank- oder Finanzdienstleistungssektor überprüfen. Beispielsweise werden Bankenagenturen, die für Geschäftsbanken geöffnet sind, in Art. 106 des Gesetzes über Kreditinstitute aufgelistet, welches nur eine allgemeine Definition von Aktivitäten vorsieht, die von Geschäftsbanken gehandelt werden können. Es sollten Vorgaben gegeben werden, um die genauen Aktivitäten und die Häufigkeit der Transaktionen zu erläutern.

Rundschreiben 15/2015 / TT-NHNN vom 2. Oktober 2015 zur Führung von ausländischen Devisengeschäften durch Kreditinstitute bedarf auch spezifischer Anleitungen der Vietnamesischen Staatsbank. Die Bestimmungen des Rundschreibens Nr. 15 sind zu vage hinsichtlich der Umwandlung von Fremdwährung in vietnamesische Währung bei Geldtransfergeschäften. Eine Unsicherheit entsteht auch bei der Prüfung der Dokumente, die für Deviseneinkaufsgeschäfte in einer Fremdwährung im Falle von elektronischen Vereinbarungen erforderlich sind. Darüber hinaus sollte die Vietnamesische Staatsbank die Verwendung von Swaps zur Anpassung der unterzeichneten Terminkontrakte beinhalten und eine Vorlaufzeit für die Freigabe von Fremdwährungen für Kunden vor der Reise nach Übersee für fünf Tage vor dem Abflug festlegen, anstatt zwei wie im Rundschreiben vorgesehen.

Der Ausschluss sämtlicher Garantien, die auf der Grundlage einer im Ausland gewährten Zahlungsgarantie und aus dem Kreditlimit eines einzelnen Kunden erteilt werden, sollte zulässig sein.

Darüber hinaus sollte die Vietnamesische Staatsbank die Akzeptanz einer flexibleren VND-Kontostruktur fördern, indem sie beispielsweise die gleichzeitige Nutzung mehrerer Konten bei derselben Depotbank ermöglicht und die vereinfachte Eröffnung von Konten für ausländische Investoren ermutigt. Die Erleichterung des Zugangs von Ausländern zu lokalen Banken und Börsen ist notwendig, um die Einrichtung von Bankdienstleistern zu erweitern und würde dazu beitragen den Bankenmarkt in Vietnam zu entwickeln.

Das Gesetz über Kreditinstitute und das Rundschreiben 04/2013 / TT-NHNN erkennt hingegen nur Diskontierungs- und Factoringaktivitäten mit einem vorbehaltenen Rückgriffsrecht an. Der Mangel an Schutz gegenüber vietnamesischen Exporteuren erfordert die Umsetzung eines von der Vietnamesische Staatsbank erlassenen Rundschreibens, das es ermöglicht Rabatte für Rückgriffe und Factoring-Ansprüche  geltend zu machen.

Es wurde ein Gesetzesentwurf zur Regulierung der Kreditgeschäfte eingeleitet, der die Verwendung von Darlehen zur Rückzahlung von Schulden reguliert, die von Kreditinstituten und ausländischen Bankfilialen gekauft wurden, soweit nachgewiesen wird, dass das Darlehen keine Forderungsausfälle abdeckt. Es ist internationale Praxis, dass eine neu gegründete Gesellschaft in Vietnam ausländische Darlehen von ihren Muttergesellschaften im Ausland akquiriert und dann Darlehen in VND aufnimmt, um die Devisenanlagen zurückzuzahlen. Die Vietnamesische Staatsbank sollte dann Übergangskredite ermöglichen, um Transparenz und Cash Management zu gewährleisten.

Administrative Fragen, die von Ministerien gelöst werden müssen

Die Vereinfachung der Zulassungsverfahren, die mit der Verantwortung der Kreditinstitute und der Organisationen im Zusammenhang mit Devisengeschäften zusammenhängen, würde die Kreditvergabe fördern und die Effizienz der Devisenverordnung erhöhen. Nicht nur Kreditinstitute sind verantwortlich die Dokumente zu überprüfen und zu speichern, sie tragen auch die rechtliche Verantwortung alle durch den Kunden zur Verfügung gestellten Informationen auch präzise zu überprüfen.

Klare Leitlinien festzulegen würde dazu beitragen einige Probleme zu lösen, wie etwa die Schwierigkeiten für Kunden, ausreichende Unterlagen bereitzustellen, wenn diese von Dritten gehalten werden. Darüber hinaus fallen zusätzliche Kosten an für Kreditinstitute und Kunden zur Erbringung von Zahlungsdiensten, um die zahlreichen Anforderungen zu erfüllen.

Daher sollten die staatlichen Agenturen ihre Datenbank zur Unterstützung der Informationsprüfung im Fall von Zahlungsdiensten anstatt der Anforderung von Kunden zur Bereitstellung freigeben. Kunden sollten auch für die Richtigkeit der Informationen, die sie liefern, haften.

Die Vietnamesische Staatsbank hat mehrere Dokumente vorgelegt, die die Durchführung des Rundschreibens 30/2014 / TT-NHNN bei der Vergabe von Darlehen betreffen, und es wird erwogen die Betreuungsaktivitäten als Geschäftsbetrieb gelten, wenn sie kontinuierlich zu gewinnorientierten Zwecken eingesetzt werden. Allerdings müssen die Begriffe “fortlaufend” und “gewinnorientierte Zwecke” konkretisiert werden, um eine gleichmäßige Umsetzung des Rundschreibens zu erreichen.

Ausblick auf das EU – Vietnam Freihandelsabkommen

Das am 2. Dezember 2015 unterzeichnete EVFTA, das bis Januar 2018 in Kraft treten soll, ist ein großer Fortschritt für die EU und die vietnamesischen Märkte. Tatsächlich eröffnet das Freihandelsabkommen nicht nur neue Möglichkeiten für den Export von Gütern, sondern verbessert auch die Versorgung mit Dienstleistungen und damit die Gründung von Unternehmen zur Durchführung ihrer Aktivitäten.

Gemäß Kapitel 8, Anlage 8 der EVFTA dürfen vietnamesische Gesetze und Verordnungen über die in Vietnam erbrachten Bankdienstleistungen die im Rahmen der EVFTA eingegangenen Verpflichtungen nicht umgehen. Da das Bankensystem reformiert werden soll, können wir mit zahlreichen von der EVFTA beeinflussten Änderungsanträgen rechnen, die vor allem Devisentransaktionen betreffen.

Zusammenfassung

– Der Interbank-Markt und Cash-Management-Produkte müssen entwickelt werden, um diese an internationale Standards und Anforderungen anzupassen.

– Die Vietnamesische Staatsbank sollte unzureichende Vorschriften, insbesondere zu den erforderlichen Dokumenten, zur Stärkung der Kreditwürdigkeit für Kreditinstitute und deren Kunden, ändern und ergänzen.

– Die Vietnamesische Staatsbank sollte auch eine flexiblere Kontenstruktur für lokale und ausländische Kunden und eine größere Flexibilität bei den Übernahmekrediten nach internationalen Praktiken fördern.

– Die zuständigen Ministerien sollten die bürokratischen Zulassungsprozesse im Zusammenhang mit Devisengeschäften und Darlehen erleichtern und das Datenbank-Sharing staatlicher Stellen fördern.

***

Bitte zögern Sie nicht, Herrn Rechtsanwalt Oliver Massmann unter omassmann@duanemorris.com zu kontaktieren, sofern Sie Fragen haben oder mehr darüber erfahren möchten. Oliver Massmann ist der Geschäftsführer von Duane Morris Vietnam LLC.

Vielen Dank!

 

 

VIETNAM FOREIGN DIRECT INVESTMENT (FDI) – LATEST UPDATE AND OUTLOOK ON EUROPEAN UNION – VIETNAM FREE TRADE AGREEMENT (EVFTA)

Vietnam has worked on attracting FDI with a reduced Corporate Income Tax for prioritized sectors, with a lowered standard rate – from 25 to 10-20 percent – and by waiving the land rental fees for Foreign Invested Enterprises (FIEs).  If the FDI are promoted, it is mainly due to the technological transfer they include.  Despite the increasing number of foreign invested enterprises in Vietnam, the spillover effects are still expected because of the lack of three conditions: dense backward linkages, geographical proximity and FDI absorptive capacity.

Our first concern tackles the lack of backward linkages created by Vietnamese firms.  More than half of the FIEs import inputs from home or from a third country, depending on several factors: the suppliers form, the sector and the country of origin.

FIEs are mainly served by private and import suppliers, even though the percentage of FIEs by suppliers’ type varies within each sector.  Finance and services are the two sectors with the most backward linkages since they rely on human capital.  In manufacturing and mining sectors, the FIEs import more than half of the inputs from another country.

Besides, the FIEs are diversifying their sources, showing a change of sourcing strategy regardless of the investment incentives they receive.  The suppliers’ types are more diverse than it used to be: in 2-year time, 45 to 68% of the FIEs served by domestic private suppliers, 10 to 20% served by household suppliers… the in-house sourcing is the only supplier form which has decreased.

The many incentives are meant to promote FDI in high-tech sector, underprivileged regions and other priority sectors, but we can question the reality of the technological transfer. Indeed the incentives target regions and sectors that are not ready to receive such advanced technologies and therefore FIEs in more developed regions do not rely on incentives.

Across provinces, the main sectors determine the source of FIEs suppliers considering the complexity of the technology needed for the activity. Vietnamese suppliers are more able to form linkages with FIEs in lower-tech sectors, where the technological gap is not prohibitively large.  Thus, more linkages are established with Taiwanese companies which concentrate on textiles, light manufacturing and light electronics, than with Japanese or Korean companies specialized in complex electronics.  FIEs are under no obligation to transfer their technology which prevents Vietnamese firms to join the high-tech supply chain and to establish forward linkages.

The geographical proximity between the FIEs centers and the domestic private firms must be greatly considered as the transfer of technology mostly occurs in face-to-face technical consultations.  Yet, it is difficult to draw a distinction between the proximity impact and the domestic firm’s strategy.  In either case, the proximity has an influence over the choice of strategy and a close proximity ensures a better technological spillover.  The establishment of a private domestic firm in an industrial zone increases the efficiency of exporting but diminished the chance of technological transfer by isolating the FIE from a larger economic pole.

Finally, the FDI absorptive capacity facilitates even more technological transfer.  Indeed, if the gap between the domestic enterprise and the FIE in matter of new technology and of work force training is too large, the potential for transfer is reduced.

In matter of labor quality, State-Owned Enterprises have a higher percentage of high-quality labor when domestic firms have less educated labor force.  The quality of the work force is crucial to adopt FIE’s technologies and management techniques.  Thus, domestic suppliers of FIEs are less likely to assimilate from their foreign clients due to a more limited absorptive capacity.  Improving labor quality is the key missing in promoting FIEs technological transfer.  The linkages and the proximity only allow people to get in touch and enhance a better spillover.

Guidance on the EVFTA

It is a golden time to invest in Vietnam due to the FTA, Vietnam being the only ASEAN country to sign this agreement with the EU (Singapore has signed the FTA in 2014 but this does not affect Vietnam’s competitiveness as Singapore mainly exports machines, chemical products and transport equipment).

Under the provisions of the agreement, over 99% of the tariff lines will be eliminated within 7 years from the effective date of the FTA.  Vietnam’s duties on EU exports will disappear in a ten-year period, EU’s duties in a seven-year period for some products (motorcycles, car parts, half of EU pharmaceutical).  The opening of the market will emphasize commercial relations between EU and Vietnam and benefit to both of them. Vietnam’s commitments to World Trade Organization (WTO) and to additional (sub)sectors such as Interdisciplinary R&D services, nursing services, packaging services etc. offer the EU partners best possible access to Vietnam’s market.

For the distribution sector, an Economic Needs Test is required, as for the WTO, but with exemptions and time delay of five years after the date of entry into force of the Agreement. Thus after 5 years, the requirement of the ENT will be abolished.

Vietnam is the most investment worthy place in ASEAN and will ensure this position partially thanks to EU-VN FTA. Its stable development of the economy and controlled inflation, its adapted legislation foster an environment proper to investment.

Most important issues

  • Consider what suppliers’ form is the most suitable to be served by, regarding the technicity of the activity.
  • Choose the relevant strategy to adopt between perceiving incentives but letting go of linkages, and establishing backward linkages with the domestic firms’ even if it means waiving incentives.
  • Decide the timing to invest: Vietnam is the new land of investment this is why investors should position themselves as early as possible to timely grab the opportunities that FTAs create when they come into effect.
  • Pay attention to the newly adopted legislation: the Government tends to improve the business climate by reforming the legislation, especially when new trade pacts are coming into effect (e.g. Investment Law, Enterprise Law, decree on Public-Private Partnership).

***

Please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com if you have any question on the above, Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Thank you very much!

 

ドナルド・トランプ氏への手紙 環太平洋経済連携協定 – 絶好のチャンスを逃す危機 オリバー・マスマン  ドウェイン・モリス・ベトナム法律事務所 代表

 

米国トランプ大統領

環太平洋経済連携協定(TPP)から離脱するという就任初日に出した声明に関して、TPP批准の可能性を再考して頂きたくお願い申し上げます。

TPPから離脱するということは即ち、米国は他のTPP諸国の政府調達へのアクセスを失うことになり、その額は1兆4,920億米ドルに上ります。TPPのように高い基準の政府調達規制は既存の国際協定にはどこにも見当たりません。その上、米国がTPPと同等の高い政府調達基準で二国間協定を締結するには、さらに10年を要する可能性があります。新たに交渉をする代わりにこのTPPを批准することで、米国は時間、労力そしてもちろん何十億米ドルを節約することができる為、非常に重要になるはずです。

以下の事実が今後の決断に役立ち、TPPがどのように米国を再び偉大な国にするのに役立つか明確に示してくれると我々は確信しています。興味をお持ちだと思うことは、米国が利益を得ることができるTPP加盟国の政府調達額が非常に高い点でしょう。

既にご存知のように、TPP諸国の人口は2015年7月時点で4億9,400万人を超えています。TPP諸国は2014年に米国の総輸出額の44.8%、また一般輸入額の37.6%を占めています。TPPに関する18,000品目以上の関税を削減することで、新しい市場に参入することが可能になれば米国の輸出入業者にとって大きなメリットになるでしょう。

米国の国際貿易委員会が推定したように、TPPにより米国の商品・サービスの世界への輸出は2032年までに272億米ドル増加し、米国の輸入は489億米ドル増加すると見込まれています。

次の表には各TPP諸国のデータが記載されており、米国の投資家が利用できる調達市場を示しています。

  GDP(米ドル) 政府調達のGDPのパーセンテージ(%) 政府調達の総額(米ドル)
オーストラリア 1兆5,600億 12.44 194,064,000,000
ブルネイ 114億7,000万 4.1 470,270,000
カナダ 1兆8,270億 13.34 243,721,800,000
チリ 1799億 2.9 5,217,100,000
マレーシア 3053億 25 76,325,000,000
メキシコ 1兆2,610億 5.16 65,067,600,000
ニュージーランド 1858億 14.56 27,052,480,000
ペルー 1926億 17.6 33,897,600,000
シンガポール 2741億 9.74 26,697,340,000
ベトナム 1714億 12.84 21,000,000,000 -22,000,000,000
日本 TPP批准済) 4兆9,200億 16.22 798,024,000,000

注釈、上記は2006年~2017年の期間のデータです。

上記に示したように、TPP諸国の政府調達額は総額1兆4,920億米ドルにもなります!

またそれらは古い数字です。多くの国は経済成長が著しい国となっています。現在の総額はさらに高いでしょう。

米国はこの絶好の機会を逃すつもりですか?

TPPの大きな進展は、これまで政府調達に同意せず、また既存の米国自由貿易協定(FTA)やWTOの政府調達協定(GPA)に同意していないベトナム、マレーシア及びブルネイの3カ国でさえも同意すると約束したことでしょう。これは米国の商品生産者やサービス企業にとって重要な輸出機会となります。現在、中国企業が最も利益を上げています。ベトナムの国営企業の電力、鉱業、製造、鉄鋼そして化学プロジェクトの90%を中国企業が請け負っているのです。中国国家建設エンジニアリング社(CSCEC)は業績が芳しくなく、贈賄罪により世界銀行のブラックリストに載ってはいますが、それでも重要な契約を獲得し続けています。TPPにより市場が米国企業に対し開かれ、おそらく歓迎されるでしょう。

一部のアジア太平洋諸国及びその他の国々では、外国の入札者に不利益をもたらす政策を実施しています。TPPでは初めてベトナムやマレーシアなどの国がアメリカの協力を求めることが可能になります。政府調達に関する手続き及び法改正は米国の輸出業者に対し以前閉ざされていた市場への介入、そしてより効果的に競争することを可能にします。

その上、カナダはNAFTA(北米自由協定)の公約をTPPの基準まで引き上げることに同意しました。新たなGPAの水準は2014年度のWTOガイダンスに基づきNAFTAよりも強力な公約となっています。

米国は二国間協定が締結するまで待てないはずです!

最初にTPPの交渉が始まってから既に12年が経過しています。NAFTA(4年)、COMESA(16年)、そしてSAFTA(9年)などの国際条約が締結までに膨大な時間を要したように、二国間協定も同様に時間を要します。また成功するという保証などありません。実際はむしろ上手くいかないでしょう。マレーシア、ブルネイ及びベトナムのような国々は政府調達の規制に合意するという大きな措置をとりました。二国間協定がどのくらいの期間を要するかは、4年前に締結された欧州連合とベトナム自由貿易協定(EVFTA)に示された通りです。しかしながら、EVFTAは政府調達の規則に関するTPPの基準に達していません。公正で透明性が高く予想可能で被差別的な市場の創設を延期すべきではありません。GPAの水準がこれまで以上に高くなる可能性があるからです。これ以上良い協定を交渉する可能性は極めて低いですし、中国やロシアが米国に取って代わる可能性は非常に高いです。日本の安倍晋三首相は既に中国に中心が移る可能性があると述べています。しかし、中国に目を向けているのは日本だけではありません。オーストラリア、ニュージーランド、ベトナム、マレーシア、シンガポールそしてブルネイが既に中国とのFTAの交渉を進めています。

この協定を見送ることで米国は何十億もの経費がかかり、多くの労力を失うことになります。二国間協定の交渉は多大な時間及び費用がかかり、またTPPに近いGPA基準に達することは非常に難しいでしょう。

それでも米国は待つことができますか?

答えはNOのはずです!

敬具

オリバー・マスマン

*上記に関し更なる情報をご希望の場合は、直ぐにご提供致します。

 

 

Revolve, Rollover and Refinance: New Lending Rules in Vietnam

Revolve, Rollover and Refinance: New Lending Rules in Vietnam

A few years ago the State Bank of Vietnam (“SBV”) started the custom of celebrating the new year by firing a salvo of new regulations during the last working days of the year.  This time it was no different, except that the salvo lasted beyond the Lunar New Year holidays.  On 9 February 2017, the SBV released on its website the last two circulars of 2016 dated 30 December.  The new regulations are of great importance for the country’s banking system and the economy at large as they aim to overhaul the regulatory framework applicable to lending activities of credit institutions[1] and foreign bank branches in Vietnam (hereafter, banks).  Although, it will take some time for banks and their clients to fully assess the impact of the new lending regime, we believe the following three changes introduced by the first of the two circulars – Circular 39/2016/TT-NHNN on credit activities of credit institutions and foreign bank branches (“Circular 39”) – are the most significant.

Revolving loans and rollover of loans.  Despite being quite common in other markets, these two very common international banking practices were not formally permitted in Vietnam.  Circular 39 will allow borrowers having business cycles not exceeding one (1) month to obtain revolving loan facilities from banks for up to three (3) months.  Rollovers will also be possible provided that the borrower does not have non-performing loans and the total tenor of the rolled over loan does not exceed 12 months following the initial disbursement and does not exceed one business cycle of the borrower.

Refinancing.  Similarly to revolving loans or rollover of loans, refinancing was not allowed in Vietnam in the past.  Limited refinancing of cross-border loans was first authorised in 2014[2]. Circular 39 will now allow refinancing of domestic loans as well, provided that all the following conditions are met: (i) the refinanced loans were extended for business purposes (consumer loans remain therefore excluded from refinancing); (ii) the maturity of the refinancing must not exceed the residual tenor of the loans being refinanced; and (iii) the refinanced loans have not been restructured.  Importantly, it is still prohibited for a bank to extend a new loan to refinance another loan granted by the same bank.

Enhanced lenders rights. Circular 39 makes an effort to reinforce the protection of banks as creditors.  For instance, they will now have the right to continue the recovery of unpaid loans even after exhausting all agreed loan recovery methods (e.g. sale of secured assets).  Banks will have the right to claim compensation for damage caused by breaches of loan contracts in addition to penalty interest payments (provided that the principle of compensation for damage caused by breach of contract has been agreed with the client in the loan contract).  They will also have greater freedom in agreeing to reductions or waivers of interest and fees.

Circular 39 will take effect in a month time, on 15 March 2017, and will replace Decision 1627/2001/QD-NHNN dated 31 December 2001 on the lending regime of credit institutions amended on multiple occasions by the SBV over the 15 years of its implementation. With these rather positive changes the SBV hopes to ensure that credit continues to grow despite a challenging global and domestic macro-economic environment while non-performing loans are kept in check.  Whether Circular 39 will help achieve these objectives remains to be seen.  It is still early stages in understanding all the implications of the regulatory step 39.

[1] The term “credit institutions” in Vietnam includes commercial banks, non-bank financial institutions (mainly finance companies), micro-finance institutions and people’s credit funds.

[2] State Bank of Vietnam Circular 12/2014/TT-NHNN dated 31 March 2014 on conditions applicable to foreign borrowings of enterprises not guaranteed by the Government.

 

For more information, please contact partner Giles Cooper at gtcooper@duanemorris.com or special counsel Bach Duong Pham at dbpham@duanemorris.com.

VIETNAM – BANKING AND FINANCING – OUTLOOK ON THE EUROPEAN UNION VIETNAM FREE TRADE AGREEMENT (EVFTA)

Vietnam’s constant growth is highlighted by numerous macroeconomic data such as a Gross Domestic Product of 5.93%, a Purchasing Managers Index up to 52.9 points in September 2016  and conclusively the increasing number of Foreign Direct Investment.

Furthermore, Vietnam is endowed with a privileged situation of controlled inflation, political stability and stable macro environment and the best prospects to maintain it. The State Bank of Vietnam (SBV) is willing to further stabilize macroeconomic by lowering lending interest rates, by resuming foreign currency lending to exporters who need to pay for local expenses and by  increasing risk-weighted assets for loans in real estate sector.

Macroeconomic issues

The multiplying number of infrastructure and real estate projects proves the revival of the real estate sector and explains the large amount of credit loans granted in the past few years. Even though ratios of Banks Non-Performing Loans are diminished, it is recommended to pay further attention to banks’ loan books related to property market to avoid situations of insolvency.

In addition, the interbank market must be developed in order to establish a relevant market benchmark. It is necessary to re-evaluate the existing long term yield curve to integrate Scheme of Money Market and create short term yield curve benchmark including derivative products. Moreover, VietNam InterBank Offered Rates (VNIBOR) is transmitted through local banks whereas a contribution by the SBV would reflect the true market fluctuations.

Furthermore, the SBV must develop cash management products to meet with international banking requirements. The lack of regulations establishing cash management products e.g., cash sweeping and pooling system or inter-company lending, creates earnings shortfalls for banks which accordingly cannot provide such services to their clients.

Technical issues requiring the SBV  intervention

The restructuration of the banking system during the 2016-2020 period by the SBV should include the amendment of Circular 36/2014/TT-NHNN dated November 20th 2014 on minimum safety limits and ratios for transaction operated by credit institutions and branches of foreign banks. Indeed, Circular 36 obliges credit institutions to verify any information of related persons in keeping credit limits in control but does not provide any provision on how to identify relevant related person in alignment with international standards.

The SBV should then guide banks and customers on the matter, as well as removing restriction on extending credit for credit cards. As long as banks are ensured that the borrower can pay the balance ahead of maturity, credit extensions for credit cards should be allowed.

The SBV should also review the activities included in the banking or financial services sector. For instance banking agent activities open to commercial banks are enumerated in Article 106 of the Law on Credit Institutions, which only provides a general definition of activities that may be acted by commercial banks as agents. A guidance should be provided to explain the exact activities, frequency of exercise.

Circular 15/2015/TT-NHNN dated October 2nd 2015 guiding foreign transactions of foreign currency by credit institutions also requires specific guidance from the SBV. The provisions of Circular 15 are too vague regarding the conversion of foreign currency into Vietnamese currency in case of money transfer. An uncertainty also emerges considering the documents required for foreign currency purchasing transactions denominated in a foreign currency in case of electronic agreements. Moreover, the SBV should include the use of swaps to adjust the signed forward contracts, and include a lead time to release foreign currency for customers traveling overseas five days prior to departure instead of two as stipulated in the Circular.

The exclusion of all guarantees  issued on the basis of a counter guarantee granted abroad and out of the credit limit to a single customer should be allowed.

In addition, the SBV should promote the acceptance of a more flexible VND account structure for instance by allowing the simultaneous use of several accounts at a same custodian bank, and encourage the opening of more simple accounts for foreign investors. The facilitation for foreigners to access bank and local stock market is necessary to extend the establishment of banking service providers and would help develop the banking market in Vietnam.

On the other hand, the Law on Credit Institutions and Circular 04/2013/TT-NHNN only recognize discounting and factoring activities with a reserved recourse right. The lack of protection towards Vietnamese exporters induced requires the implementation of a Circular issued by the SBV allowing non-recourse discounting and factoring related claims.

A Draft Circular has been initiated to regulate lending activities which would allow the use of loans to repay debts bought from lending institutions and foreign bank branches if it is proven that the loan is not covering bad debts. It is an international practice that a newly formed company in Vietnam acquires foreign loans from their parent companies abroad and then takes loan in Vietnamese Dong to repay the foreign exchange facilities. The SBV should then allow roll-over loans to ensure transparency and cash management.

Administrative issues to be solved by Ministries

Simplification of paperwork and supporting documents related to the responsibility of credit institutions and organizations engaged in foreign exchange transactions, would encourage lending activities and enhance the efficiency of the Ordinance on Foreign Exchange. Not only credit entities are responsible to review and keep the document, they also bear legal responsibility of the accuracy of all provided information even by the customer.

Establishment of clear guidelines would help resolve some issues such as the difficulty for customers to provide sufficient documentation when held by third parties. Moreover, additional costs incurred by credit institutions and customers to provide payment services and meet the requirements on document are earnings shortfall.

Therefore, state agencies should share their database to support information verification in case of payment services instead of requesting customers to provide it. Customers should also be held responsible for the accuracy of the information they are delivering.

The SBV has issued several documents guiding the implementation of Circular 30/2014/TT-NHNN on entrustment lending, and it is acquired that entrustment activities are business operations when made continuingly for profit making purposes. However, the terms of “continuingly” and “profit making purposes”  must be explicit to achieve an homogeneous enforcement of the Circular.

Outlook on the EVFTA

The EVFTA signed on December 2nd 2015 and expected to enter into force by January 2018, is a great leap forward for both the EU and the Vietnamese markets. Indeed, the Free Trade Agreement not only opens new opportunities for goods export, it also enhances services supply and thus establishment of companies to perform their activities.

Pursuant to Chapter 8, Annex 8 of the EVFTA, Vietnamese legislations and regulations related to banking services provided in Vietnam must not circumvent commitment taken under the EVFTA. As the banking system is planned to be reformed, we can expect many amendments influenced by the EVFTA especially concerning foreign currency transactions.

Most important issues

Ø  The interbank market and cash management products must be developed to adapt to international standards and requirements.

Ø  The SBV should amend and complete unsufficient regulations especially on required documents to reinforce loans efficiency for both credit institutions and customers.

Ø  The SBV should promote a more flexible account structure for local and foreign customers and more flexibility in roll-over loans according to international practices.

Ø  The relevant Ministries should simplify the paperwork related to foreign exchange transactions, lending activities, and promote database sharing for Government state agencies.

***

Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Thank you!

 

 

 

VIETNAM – REAL ESTATE – LAND USE RIGHTS LIMITATIONS FOR FOREIGNERS – OUTLOOK ON THE EUROPEAN UNION VIETNAM FREE TRADE AGREEMENT (EVFTA)

 

The real estate market in Vietnam has constantly been growing since the Law on Real Estate Business 2014 (LREB) and the Law on Residential Housing (LRH) were adopted. Initial barriers for foreign investors were partially removed with the new legislations and Decree No. 76/2015/ND-CP guiding the LREB dated 10 September 2015 and Decree No. 99/2015/ND-CP guiding the LRH dated 20 October 2015.

Nevertheless, enterprises’ expectations concerning access to properties and business development are not entirely satisfied.

Restriction on sources of capital

For residential housing projects, only the sources of capital enumerated in Article 69 of the LRH or Article 19 of Decree 99 are considered legitimate such as loans from Social Policy Bank, credit institutions and financial institutions currently operating in Vietnam or capital contribution, cooperation in investment, business cooperation, joint-venture and affiliation of organizations. As there is no mention of overseas capital except for the capital owned by the developer, raising capital then appears to be more complicated for real estate developers. Therefore, as there is no need to limit the developers’ ability to raise capital for legitimate sources, the Government adopt restrictive measures for illegitimate sources only and control the legitimacy of sources. Opening capital to off-shore credit institutions and non-credit institutions would greatly improve access to the real estate market.

An uncertainty remains as to define foreign invested enterprises (FIEs). Indeed, neither in the LREB nor in Decree 76 do we find a provision explaining the notion of FIEs. But the Law on Land (Land Law) 2013 states that FIEs are joint venture enterprises and enterprises wholly or partly owned by a foreign company without detailing ownership percentage. Under the Law on Investment 2014, the status of economic organization with foreign capital implies a foreign ownership of 51% or more. Therefore some details must be given as whether enterprises with less than 51% of foreign ownership are regarded as local investors or not.

Considering the lack of details, we can understand that any percentage of foreign ownership prevents enterprises to be local ones. This issue is of great importance for foreign investment transactions in the real estate market and must be clarified promptly.

The difference of treatment between foreign and Vietnamese real estate developers can be found in several aspects. First of all, Article 11 of the LREB does not permit foreign developers to transfer their land use right into creating plots for sale whereas Vietnamese developers are permitted. Article 57 of the same law limits FIEs to collect a maximum of 50% of the value of sale and purchase contracts while Vietnamese companies are entitled to 70% of the value. Finally, Article 10 of the LREB prohibits foreign developers to sell, lease or offer a lease-purchase and only opens the possibility of sub-leasing. This form of business is, however, open to Vietnamese developers.

Those differences between local and foreign developers should be removed as they create unfair competition and restrain the real estate sector in Vietnam.

Restrictions on land use right of foreign organizations and individuals

The LREB authorizes organizations and individuals to lease properties for use and to purchase or lease-purchase residential houses in accordance with the LRH. Article 160 of the LRH repeats the authorization but adds a few conditions. Organizations who want to own residential houses, must establish and maintain their presence in Vietnam although foreign individuals only need to have a valid passport affixed with entry stamp. The stricter requirement for foreign organizations should be up-lifted as it is unnecessary to fix conditions to own residential houses to organizations and not to individuals.

A very concerning contradiction must be solved as it deals with notarization of sale and purchase contracts. Article 93.3(b) of the LRH allows contracts for residential housing signed with a real estate business enterprise not to be notarized. However, Article 122 of the LRH stipulates that all contracts in relation to sale and purchase of residential houses must be certified or notarized.  We could then understand that sale and purchase contracts for residential housing signed with real estate business should be notarized. However, Article 17.2 of the LREB states that real estate business contracts do not have to be notarized except contracts signed between two individuals/households.

A clearer provision should establish that notarization is not required in case a real estate business enterprise is a party to the sale and purchase contracts.

Limitation on foreigners’ purchase and ownership of real estate

Foreign individual and organizations are allowed to own a maximum of 250 individual residential houses in a ward according to Article 161.2(a) of the LRH. However, Article 76.4 of Decree 99 guiding the LRH, limits foreign individuals or organizations to possess maximum 10% of individual housing in each residential housing project. The Decree provision is then not consistent with the LRH.

In addition, pursuant to Article 159.2(b) of the LRH, foreign individuals and organizations are only prohibited from purchasing houses in national defense and security area. But pursuant to Article 75 of Decree 99, the prohibition is extended to all areas where foreigners are restricted from residing or travelling as provided under the Law on Residence and Travel. Once again, the Decree is restricting the conditions under the LRH.

In addition, Articles 77.1(b) and 77.2(b) provide additional restriction when granting the possibility of one-time expansion of residential houses owned by foreigners. Such restriction can have a serious impact on business development of developers and in the meantime on Vietnam’s competitiveness. Unlimited extensions should be granted with the exception of national defense and security areas only.

Another issue which causes many difficulties for developers concerns capital reserve. Indeed, Article 108.1(b) of the LREB requires that developers contribute 2% of apartment’s value for unsold apartments at the time of commissioning. Value is calculated based on the highest selling price of an apartment in the building regardless of the differences between the apartment of reference and the commissioned one. The requirement is not practical and should therefore be amended to refer to an apartment of the same category. Furthermore, establishing a mechanism to deal with such payments when apartments are sold at a later stage is necessary for the efficiency of the requirement.

Outlook on the EVFTA

Signed on December 2nd 2015 and expected to enter into force by 2017, the EVFTA offers great opportunity to access new markets for both the EU and Vietnam. Not only Vietnam will foster more foreign investors but also welcome more enterprises in order to develop the European-Vietnamese Cooperation.

The Vietnamese Government has already started to amend the legislation with the Law on Enterprise 2015 and the Law on Investment 2014. Yet some further changes must still be made and we can expect the influence of the EU on opening the real estate market to facilitate enterprises’ establishment.

Most important issues

–       Requirements of sources of capital are too restricted and prevent real estate developers from easily raising capital. In addition, the definition of foreign invested enterprise is not clear enough to determine the sources and the nature of transactions in the sector.

–       Vietnamese and foreign developers are treated differently which creates unfair competition and restrains the real estate sector.

–       The contradiction that sale and purchase contracts signed with real estate business enterprise have to be authorized must be up-lifted.

–       Restrictions on foreigners’ purchase and ownership rights regarding the percentage of possession, the restricted areas and the possibility of extension are not consistent in the whole Vietnamese legislation and should be standardized.

***

Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Thank you!

 

 

 

VIETNAM TAXATION – OUTLOOK ON THE EUROPEAN UNION VIETNAM FREE TRADE AGREEMENT (EVFTA)

The recently formed Government has manifested its ambition to support reforms especially related to business. Short after the oath of inauguration, it organized a conference with Vietnamese enterprises leading to the issuance of Resolution 35/2016/NQ-CP dated 16 May 2016. The main focus was to improve the investment environment. Nevertheless, some difficulties remain and review of tax policies is required from some specific perspectives.

Granting tax incentives

The Government can grant preferential incentives to foreign enterprises through investment licensing or certificate, the most secure way for enterprises to obtain their incentives despite tax law amendments. However, some local tax departments do not agree with the Government’s policy on incentives and oblige enterprises to apply the current regulations regardless of enterprises’ incentives. This reluctance is a breach in the Government’s protection over investment and investors and must be prevented.

Official Letter 12404/BTC-TCT and Circular 96/2015/TT-BTC, both issued by the Ministry of Finance (MOF), grant Corporate Income Tax (CIT) incentives for enterprises established before 01st January 2014 and not yet operational. Some local tax departments have refused to recognize such incentives and asked enterprises to amend their charter while making their business starts in 2014 in order to be entitled to CIT incentives. This request is acting towards the MOF’s willingness to boost investment and should be dropped out.

According to tax offices, any project planning the increase of enterprises capacity or fixed assets is necessarily considered an investment if increase of capacity was equivalent to increase of capital. Tax authorities then rescind CIT incentives because they believe that investment certificates are no longer updated due to the increase. Yet, initial investment certificates do not mention capacity and should remain updated as long as increases solely concern enterprise capacity and not capital. A regulation should precise that project expansion may only be investment when there are adjustments on capital investment.

Decree 218/2013/ND-CP issued by the Government, extends preferential tax rate application to 15 years for investment projects under VND6 million (~ US$260,000). To ensure a fairer treatment towards businesses, different levels could be established such as 3 years of preferential tax rate application for projects between VND 10 to 20 billion (~ US$450,000 to US$900,000).

According to the draft Decree No. 12, bonuses and commissions granted based on sale volume are deductible expenses for enterprises. Nevertheless, agents being individuals or organizations must pay taxes on these sum of money as such expenses are related to business activities. It would be more convenient for agents to have their commissions and sale bonuses exempted of VAT invoices.

On the other hand, benefits granted to employees should be extended in part to their family: welfare or recreational expenditures, visa application fee for employees’ families, etc. Through these benefits, a longer relationship between the company and the employee is ensured.  Expenses for employees’ families are deductible for companies if stated in labor contract or in companies’ Labor policy. Decree 218/2013/ND-CP should then be amended.

Resolving tax payment issues

Tax-related regulations are often amended and interpreted differently from one year to another. As tax inspections often take place a long time after the corresponding fiscal year, it seems impossible for companies to know what to comply with. Many enterprises have to pay penalties and high interests because of changing regulations between the time of tax payment and the time of tax inspection. Besides, many businesses are chased for unpaid taxes due to errors from the tax office, even though the taxes were duly paid. In the tax office, the members of the staff are not dedicated enough to reconcile tax obligations and payments.

An annual tax inspection or a change in the method of calculating penalties and late payment interests should be considered. In addition, the nomination of a task force exclusively for reconciling tax obligations and payments would be a good improvement.

Understatement of payable tax or overstatement of tax refund is liable to a fine of 20% of the difference between the tax payable and declared or paid tax amount.  Households or individuals stated in Article 107 of the Law on Tax Administration are exempted from the fine. Enterprises are sometimes in overpaid position and are still charged with a fine when the inspection occurs regardless of the intention to make a false declaration or not. The implementation of clearer regulations would avoid confusion and wrongful declaration leading to fines in such cases.

Late tax payment is also subject to penalty . Yet, several contradictory documents have been issued and it became complicated to determine on what basis to calculate the late payment interest. Indeed, Circular 26/2015/TT-BTC issued by the Ministry of Finance states a rate of 0.05% per day accordingly to the deficit of the tax payable until the tax is fully paid, for taxes declared before January 1st 2015 and found insufficient after the same date. Circular 130 contends that the late payment interest is regulated for each period. The two documents provide inconsistent guidelines, thus putting enterprises in a very delicate situation.

Article 14 of Circular 78/2014/TT-BTC states that transfer of Limited Liability Company requires filling a form equivalent to real estate transfer, regardless of the percentage real estate represents in the company assets.  Moreover, since indirect capital transfer is considered taxable income in Vietnam and in the country of origin, a double taxation in both countries applies. The system should be rethought and the application of deferred tax assets (DTA) should be considered.

Explaining VAT calculation and refund

Circular 130/2016/TT-BTC (Circular 130) provides a tax refund for short-term investment (under 12 months) with special provisions for businesses not executable within a year such as ship construction. Value Added Tax (VAT) can then be refunded for a few years only until the ship is completed and exported abroad, regardless of the total investment. This specific case should be extended to other similar industries.

Circular 130 is referring to declaration period for tax refund and elaborates the whole system around this notion without giving a clear definition and measurement. According to Circular 130, VAT is not refundable for domestic sale activities but is refundable up to 10% of the revenue generated by exported goods and services. However, the distinction is thin for enterprises doing both activities.

Besides, VAT refund for trading of imported and exported goods is not clearly explained in Article 1 of Circular 130., notably for determining the activities eligible for VAT refund. Circular 119/2014/TT-BTC adds that input VAT deduction requires non-cash payment except for gifts and donations, but excludes samples and test items.

In addition, some imported goods and services are subject to 5% VAT notably in health care industry according to Article 10.11 of Circular 219/2013/TT-BTC guiding the implementation of the Law on VAT. Article 10 of draft Decree guiding Law 106/2016/QH13 prevents businesses with 5% VAT to be entitled to VAT refund. The input costs related to such businesses being subject to 10% VAT and the input VAT not refundable are significant amount for enterprises to maintain their activities.

The services exported and “consumed outside Vietnam” have a VAT rate of 0%, whereas a VAT rate of 10% applies when such services are consumed in Vietnam. Tax authorities often focus on the place the service is performed more than on the place it is used. The notion of export services should be reviewed without allowing differing interpretation so that one definition – based on the location of the consumer – and one rule prevail.

Under the Vietnamese Law, warranty is a service the supplier provides at the expense of the buyer but not attached to goods or services delivery. Circular 103/2014/TT-BTC issued by Ministry of Finance made clear that warranty attached to goods delivered at Vietnam’s borders were not submitted to withholding tax. For the contracts signed prior to Circular 103, the situation is not clear and the Ministry of Finance should establish clear provisions. Furthermore, guidelines on provisions for foreign suppliers’ responsibility would help ensure the efficiency of free warranties for the buyer.

Circular 39/2014/TT-BTC sets out the criteria of issuing invoices as a condition to determine the finished date of service provision without explaining the term “finished”. It may depend on type, frequency or period (per month, per hour) of service.  More details on the definition of finished service and the calculation of the payment time should be provided.

Outlook on the EVFTA

The EVFTA signed on December 2 2015, will offer great investment opportunities for Vietnam. With elimination of almost all tariff barriers (85% right after the EVFTA’s entry into force, 99% a few years after), the automotive industry as well as trades in sectors such as textile and footwear will be boosted.

The Government is already supporting foreign investment by implementing a favorable policy and strict respect of a stable economy and a controlled inflation. We can expect that the EU will influence the resolution of tax issues and will impose fixed and determined tax rules to apply in Vietnam.

Most important issues

–       Local tax departments should be clearly guided about enterprises’ incentives and the notion of project expansion.

–       The taxation system with declarations and incentives in several documents, is too complex for enterprises to comply with. The tax refund calculation method must be clearly stated to help taxpayers apply regulations properly.

–       Granting VAT refund for business establishments exporting goods and services and not for businesses with output VAT at 5% may be regarded as discrimination in term of taxes among businesses.

If you have any question on the above, please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com . Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Thank you very much!

 

 

 

VIETNAM – NOW OPEN FOR BETTING BUSINESS – BREAKING NEWS – WHAT YOU MUST KNOW

 

On 24 January 2017, the Government issued Decree No. 06/2017/ND-CP, which for the first time legalizes international soccer betting in addition to horse racing betting and greyhound racing betting (Betting Decree).

Some key features:

  1. Betting business is treated as a conditional business sector the satisfaction of which is evidenced by a certificate of satisfaction of betting business conditions (Betting Business License).
  2. An entity can only do horse racing betting, greyhound racing betting once they have received an investment registration certificate (which, for a foreign invested company also serves as a certificate of incorporation) and a certificate for satisfaction of business conditions. The investment registration certificate will only be granted for horse racing betting projects with minimum investment capital of VND1,000 billion (~USD459 million). For greyhound betting projects, the minimum investment capital is VND300 billion (~USD137 million).
  3. Investment registration certificate will only be granted to 01 (one) international soccer betting pilot project with minimum investment capital of VND1,000 billion (~USD459 million). The international soccer betting pilot entity will operate within 5 years from the issuance of the Betting Business License.
  4. The Ministry of Finance will grant the Betting Business License to entities with adequate financial resources, business plans and an appropriate betting and racing bylaws.
  5. Enterprises doing horse racing and greyhound racing business must be in the form of a limited liability company or a joint stock company.
  6. A Betting Business License’s term is maximum 10 years for horse and greyhound racing betting business and 5 years for international soccer betting business from its issuance date but still within the lifespan of the Investment Registration Certificate.
  7. The maximum bet is VND1 million (~USD50) a day and the minimum bet is VND10,000 (~US 50 cents). These limits could be adjusted for each period.
  8. Players must be 21 years old and over and not being objected in writing by parents, spouses, biological children and/or themselves to bet.
  9. There should be no more than three horse/ greyhound races in a week at each location.
  10. The minimum rebate shall be 65% of the revenues from selling wagering tickets.
  11. Wagering tickets will be distributed via terminal equipment and telephone (fixed and mobile ones), excluding via Internet or internet-based applications on telephone. However, distribution of wagering tickets via telephone will only be implemented 01 (one) year after implementing the terminal equipment distribution method. In order to bet via telephone, players must have a registered account with the betting business entity. Payment of rebate must be via the players’ registered account and the bank account of the betting business entity opened at a lawful credit institution in Vietnam.
  12. The Betting Decree will take effect from 31st March 2017

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Please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Thank you very much!