Month: April 2022

As you may know, the Work Permit application process often appears as time consuming and cumbersome. Nevertheless, appropriate scheduling and thoughtful preparation of the required documents will make the licensing procedure smoother and ultimately successful.

We would like to summarize below the step by step action plan for obtaining a Work Permit for an expat to legally work in Vietnam together with our ‘DO and DON’T’ notes, for your kind reference.

Work Permit application process;

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

Public-Private Partnership (PPP) has been the cornerstone for infrastructure development and has been utilized in the past in Vietnam with varying degrees of success. Those agreements were often legally cumbersome and were put together largely on faith that both the government and investor would live up to their end of the agreement. With the implementation of the CPTPP and EVFTA/IPA and the new Law on Investment in the form of PPP 2020, the regulatory environment has shifted towards favorable conditions for PPP to become a bedrock of Vietnam’s development.

The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) came into force on 14 January 2019 for Vietnam and currently include the following signatories: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. In addition, China, Ecuador, Taiwan and United Kingdom applied and awaiting result on their accession to the CPTPP. The EU-Vietnam Free Trade Agreement (EVFTA) came into force on 1 August 2020 between the European Union countries and Vietnam.

Public Procurement:
Vietnam has one of the highest ratios of public investment-to-GDP in the world (39 per cent annually from 1995). However, Vietnam did not agree to its Government procurement being covered by the Government Procurement Agreement (GPA) of the WTO until the EVFTA
The FTA commitments on Government Procurement mainly deal with the requirement to treat EU bidders, or domestic bidders with EU investment capital, equally with Vietnamese bidders when the Government purchases goods or requests a service worth over the specified threshold. Vietnam undertakes to follow the general principles of National Treatment and Non-discrimination. It will publish information on intended procurement and post-award information in Bao Dau Thau (Public Procurement Newspaper) and information on the procurement system at muasamcong.mpi.gov.vn and the official gazette in a timely manner. It will also allow sufficient time for suppliers to prepare and submit requests for participation in responsive tenders and maintain the confidentiality of bidders
The FTA also requires its parties to assess bids based on fair and objective principles, evaluate and award bids only based on criteria set out in notices and tender documentation, and create an effective regime for complaints and settling disputes. These rules require parties to ensure that their bidding procedures match the commitments and protect their own interests, thus helping Vietnam to solve its problem of bids being won by cheap but low-quality service providers.
Dispute Resolution:
An often overlooked but critical aspect from the investor’s perspective has been the dispute resolution process before these trade agreements were in-force. Generally speaking, before CPTPP and EVFTA/IPA, most foreign investors only had the Vietnamese courts to address any dispute.
To protect interests of foreign investors, CPTPP allows foreign investors to initiate a lawsuit in International Arbitration center in case interests of foreign investors are infringed by one member country (for example, expropriation, nationalization, minimum standard of treatment…), except in case disputes arising from the implementation of commitments or obligations of investment agreements and investment authorization.
This is also covered in the EU-Vietnam Investment Protection Agreement (EVIPA). The EVIPA is a sister agreement of the EVFTA and is pending ratification by EU member states before it can come to force, expectedly by 2023. In disputes regarding investment (for example, expropriation without compensation or discrimination of investment), an investor is allowed to bring the dispute to the Investment Tribunal for settlement. To ensure the fairness and independence of the dispute settlement, a permanent Tribunal will be comprised of nine members: three nationals each appointed from the EU and Vietnam, together with three nationals appointed from third countries. Cases will be heard by a three-member Tribunal selected by the Chairman of the Tribunal in a random manner. This is also to ensure consistent rulings in similar cases, thus making the dispute settlement more predictable. The EVIPA also allows a sole Tribunal member where the claimant is a small or medium-sized enterprise, or the compensation of damaged claims is relatively low. This is a flexible approach considering that Vietnam is still a developing country.
In case either of the disputing parties disagrees with the decision of the Tribunal, it can appeal to the Appeal Tribunal. While this is different from the common arbitration proceeding, it is quite similar to the two-level dispute settlement mechanism in the WTO (Panel and Appellate Body). We believe that this mechanism could save time and costs for the whole proceedings.
The final settlement is binding and enforceable from the local courts regarding its validity, except for a five-year period following the entry into force of the EVIPA (please refer to further comments in the Legal Sector Committee’s chapter on Judicial and Arbitral Recourse).
Vietnam’s other specific commitments under the CPTPP:
Regarding telecommunication services: Allow CPTPP countries to set up joint ventures with a capital contribution of not more than 49% for basic telecommunications services attached to the network infrastructure. With value-added telecommunication services attached to the network infrastructure, we agree to allow the establishment of a joint venture with a capital contribution not exceeding 65% after 5 years after the date of entry into force of the Agreement. With services not attached to the network infrastructure, open to CPTPP countries to invest and set up enterprises with 100% foreign capital after 5 years from the date of entry into force of the Agreement.

Vietnam’s other specific commitments under the EVFTA:
Regarding Engineering services (CPC 8672) and Integrated Engineering Services (CPC 8673): for commercial presence, the supply of services related to topo¬ graphical, geotechnical, hydro geological and environmental surveys and technical surveys for urban-rural development planning, sectoral development planning are subject to the authorization of the Government of Viet Nam.

Regarding Construction and related engineering services (CPC 514-518): cross border supply of services is fully open and foreign investors can open their branched in Vietnam, though the chief the each branch must be a resident in Vietnam.

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

Vietnam’s GDP growth for 2021-2030 is forecasted to reach an average of 6.6%/year and an average of 5.7% for 2031-2045. Correspondingly, the Institute of Energy has calculated that commercial electricity will reach 491 billion kWh by 2030, and 877 billion kWh by 2045. By 2030, the total installed capacity of Vietnam’s electricity sources is predicted to be at 137.2 GW (of which coal-fired power: 27%, gas thermal power: 21%, hydroelectricity: 18%, renewable energy: 29%, imported energy about 4%, pumped hydroelectricity and other energy storage devices about 1%).

Foreign investors should take advantage of the booming energy sector in Vietnam and understand their benefits, and limitations, under free trade agreements that may affect them. In this article, we examine Vietnam’s commitments with regard to energy development under the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA).

The CPTPP came into force on 14 January 2019 for Vietnam and currently include the following signatories: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. In addition, China, Ecuador, Taiwan and United Kingdom applied and awaiting result on their accession to the CPTPP. The EVFTA came into force on 1 August 2020 between the European Union countries and Vietnam.

EVFTA:

Under Chapter 7 on Non-tariff barriers to trade and investment in renewable energy generation, Vietnam commits to promoting, developing and increasing the generation of energy from renewable and sustainable sources, particularly through facilitating trade and investment. Specific commitments include:
(a) refrain from adopting measures providing for local content requirements or any other offset affecting the other Party’s products, service suppliers, investors or enterprises;
(b) refrain from adopting measures requiring to form a partnership with local companies, unless those partnerships are deemed necessary for technical reasons and that Vietnam can demonstrate those reasons upon request of the other Party;
(c) ensure that any measures concerning the authorization, certification and licensing procedures that are applied, in particular, to equipment, plants and associated transmission network infrastructures, are objective, transparent, non-arbitrary and do not discriminate among applicants from the Parties;
(d) ensure that administrative fees and charges are transparent and non-discriminating

Vietnam has not made any commitments in the EVFTA on:
• production, transmission and distribution of electricity on private-owned line;
• production of gas and transmission of gas through a private-owned tube; and
• production of hot water and steam, distribution of hot water and steam through private-owned line.

For all service and non-service lines related to energy, at least 20% of managers, executives and specialists must be Vietnamese citizens, unless those positions cannot be replaced by Vietnamese citizens. However, a minimum of three non-Vietnamese managers, executives and experts are allowed per business.

CPTPP

Under the CPTPP, Vietnam commits its transition to a low emissions and resilient economy. Vietnam shall cooperate with other CPTPPP countries to address energy efficiency, development of cost-effective, low emissions technologies and alternative, clean and renewable energy sources; sustainable transport and sustainable urban infrastructure development; addressing deforestation and forest degradation; emissions monitoring; market and nonmarket mechanisms; low emissions, resilient development and sharing of information and experiences.

Regarding Power development, foreign investment to own or operate power transmission facilities in Vietnam may not be permitted. Vietnam Electricity Corporation (EVN) is currently the sole authorized owner and operator of power transmission facilities in Vietnam.

In addition, Vietnam reserves the right to adopt or maintain any measure with respect to investment in hydroelectricity and nuclear power.

Regarding Services incidental to energy distribution (CPC 887), Vietnam does not allow foreign services suppliers to supply such services cross-border and Vietnam also does not allow foreign investment in this sector.

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

On 31 March 2022, the Government Office issued Notice No. 92/TB-VPCP on the conclusion of the Cabinet at the meeting on finalizing the National Power Development Plan for the 2021 – 2030 period, with a vision to 2045 (PDP VIII). Deputy Prime Minister Le Van Thanh is in charge of directing the Ministry of Industry and Trade to finalize Power Planning VIII to soon organize a conference with localities on its content and implement the next procedures in April 2022.

Key points in the Notice include:

– PDP VIII must make an important contribution to the implementation of Vietnam’s commitment to bring net emissions to “zero” by 2050, closely following the development of a green and circular economy

– For solar power projects already included in the revised Power Master Plan VII but not yet implemented: MOIT must provide the criteria and conditions for electricity purchase price, economic efficiency, stability of the national power system, etc. and report to the Government Standing Committee for consideration and decision but must ensure consistency with the criteria and principles of the new PDP.

MOIT to thoroughly review the transfer of solar power capacity already included in the revised Power Master Plan VII but have not yet been implemented and do not meet the economic efficiency targets, especially the electricity purchase price, to consider adjusting the planning.

– For rooftop solar power that has been invested, if it is in accordance with regulations, for the right purposes, and does not take advantage of the mechanism for profit: MOIT, EVN and the Committee for Management of State Capital at Enterprises to calculate the balance for electricity consumption (not including the capacity of 7,755 MW of rooftop solar power into the data of total power capacity in the planning).

– For the policy of nuclear power development to ensure long-term energy security and ensure the energy conversion process, MOIT to continue research and report to the competent authorities for consideration and comments – this shall not be included in the calculation in the PDP VIII.

– Development must gears towards an independent and self-sufficient economy, improving the autonomy of the energy industry, minimizing dependence on foreign countries. This is directly related to the duty of maximizing and rationally exploiting primary energy resources in the country for electricity production such as natural gas, wind energy, solar energy, ocean waves…; at the same time, balance the use of imported LNG sources reasonably.

– To reduce long-distance power transmission and reduce investment in interregional transmission grids.

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

In 2020, when most sectors suffer major reductions due to impacts of the Covid-19 pandemic, the education sector stood out with an increase of 58% in foreign-direct investment.

Investors eyeing investment in the education sector in Vietnam must be aware of their benefits, and limitation, under the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA). The CPTPP came into force on 14 January 2019 for Vietnam and currently include the following signatories: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. In addition, China, Ecuador, Taiwan and United Kingdom applied and awaiting result on their accession to the CPTPP. The EVFTA came into force on 1 August 2020 between the European Union countries and Vietnam.

CPTPP:
Vietnam welcomes the opportunity to formulate policies with other CPTPP countries on initiatives that enhance and promote growth and investment in education. Specific commitments of Vietnam under the CPTPP with regards to education services include:
• Vietnam reserves the right to adopt and maintain any measure related to investment in secondary education services.

• Foreign investor is prohibited to provide educational services in the following subjects: security, national defense, politics, religion, Vietnamese culture and other subjects necessary to protect Vietnamese social morality. This limitation does not prevent the provision of educational services in subjects to which Vietnam has committed in other trade agreements.

• No foreign investor is allowed to provide primary education or secondary education services except through:
– Pre-school educational institutions implementing foreign educational programs for children who are foreigners;
– General education institutions implementing foreign educational programs, granting foreign degrees, for foreign students and a part of Vietnamese students in need.

• General education institutions are allowed to accept Vietnamese students, but the number of Vietnamese students in primary and secondary schools shall not exceed 10% of the total number of students in the school, in high schools not more than 20% of the total number of students in the school.

The establishment of foreign educational institutions in Vietnam will automatically lead to increase in education-related travel services and a variety of education tools advancement (e.g. online courses), contributing to the trading activities between investor countries and Vietnam.

EVFTA:
Vietnam’s commitments in educational services are only in technical, natural sciences and technology, business administration and business studies, economics, accounting, international law and language training fields.
• For secondary education service, cross-border supply and foreign investor’s commercial presence in Vietnam are fully open.
• For higher education services, adult education and other education services (including foreign language training), Vietnam has not made any commitments under the EVFTA and the education content under such services must be approved by Vietnam’s Ministry of Education and Training.
• Foreign teachers who wish to work in foreign-invested schools in Vietnam shall have at least 5 years if teaching experience, and their qualifications shall be recognized by the competent authority.

Vietnam welcomes foreign capital to further increase the quality and quantity in the education sector. With the number of middle-class growing rapidly, citizens require much higher living standards. This includes parents sending children to study abroad or at least, enjoy world-class education domestically. An increase in the number of expats also contribute to the need for more advanced and tailored education system. Foreign investors should grasp the opportunity to invest in this growing market sector.

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