Month: May 2022

1. How do you assess Vietnam’s general economic performance? Besides manufacturing, are there any other sectors worth investing in or have huge potential?

Vietnam’s economic performance has been impressive. In 2020, while major global economies suffer from the Covid-19 pandemic, Vietnam posed the highest GDP growth in South East Asia, higher than China, Singapore, and Japan. In 2021, when Covid-19 resulted in almost nation-wide lockdown for almost the whole year, the country still posed a positive GDP growth of 2,68%.
Sectors with huge potential: water and waste treatment, clean energy development (biomass, LNG, offshore wind…), agriculture products processing, healthcare equipment

2. How have CPTPP and other major trade agreements benefited Vietnam? What difference will RCEP make?

The CPTPP and the EVFTA have made trading between Vietnam and the signatory countries cheaper and more efficient thanks to the reduced tariff schedule as well as administrative procedures. During the worst period of the Covid-19 pandemic, Vietnam’s export remains outstanding thanks to these free trade agreement. Vietnam foresee similar benefits coming from the RCEP. Additionally, the RCEP brings about a huge political benefit of strengthening ties between Vietnam and other countries in the region, which can result in a more stable and connected political scene in the region.

3. When Vietnam went into lockdown in the third quarter of last years, some productions moved back to China. Was this just temporary and moving manufacture out of China has become an irreversible trend?

In my opinion, the move is temporary. As in a supply chain, it is usually more cost effective for business to move production, as long as production still going on, rather than to stop production for any reason. So it’s not a surprise that when businesses in Vietnam were suspended in the last year for Covid-19 protection, companies had to seek solution elsewhere.

I think that once China recovers from the current Covid situation and issues more policies favorable for foreign investors, the flow may be reversed.

4. Do you think the structure of China-Vietnam trade is more complementary or more competitive? How do you see their positions in the global supply chain?

I see the structure is more complementary, where both countries export to the other products that they need. China closed its border last years due to Covid-19, the global supply chain suffered heavily. I think that’s enough to describe the importance of China in the world’s supply chain. If the flow of business moving production from China to Vietnam continues, Vietnam will very soon become a key player in the global supply chain.

5. Have you seen a major increase in foreign investment recently? Where are they mainly from and which sectors they are investing in?

In 2021, despite the complicated development of the Covid-19 epidemic, FDI inflows into Vietnam reached 31.15 billion USD, up 9.2% compared to 2020. Total foreign investment capital registered in Vietnam as of March 20, 2022 reached US$8.91 billion.
Among 35 countries and territories with newly licensed investment projects in Vietnam in the first three months of 2022, Denmark is the largest investor with $ 1.32 billion, accounting for 41.1% of the total capital. new level registration; followed by Singapore with 626.6 million USD, accounting for 19.5%; China $ 379.5 million, accounting for 11.8%; Taiwan 219.9 million USD, accounting for 6.8%; Hong Kong Special Administrative Region (China) $ 191.7 million, accounting for 6%. Sectors: processing and manufacturing industry, real estate

6. Is Vietnam ready to be the next world’s factory?

Yes. Vietnam now has the human resources, technology, government support, foreign investment to become the next world’s factory. Vietnam has grown so fast, economically and politically, in the last 5 years, that in 5 years to come, we may see something we wouldn’t even be able to foresee from today.

Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.comif 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.

Am 26. April 2022 leitete der stellvertretende Premierminister Le Van Thanh eine Sitzung des Bewertungsrats zur Beurteilung des Entwurfs des Nationalen Energieentwicklungsplans 8, wobei der Entwurf gebilligt wurde. Das Industrie- und Handelsministerium arbeitet nun mit den zuständigen Regierungsstellen zusammen, um den endgültigen Entwurf im Mai 2022 dem Premierminister zur Genehmigung vorzulegen.

Laut dem Plan soll im Jahr 2025 die Gesamtkapazität der Kraftwerke etwa 93.862 – 98.394 MW (ohne Energie durch Solaranlagen auf Dächern und Kraft-Wärme-Kopplung) betragen. Diese Kapazität setzt sich zusammen aus:

-Wasserkraft 25.779 – 26.795 MW, was einem Anteil von 27,2 – 27,5% entspricht;

-Kohlekraftwerke 28.867 MW, was einem Anteil von 29,3 – 30,8% entspricht;

-Gas-Wärmekraftwerke (einschließlich LNG) 14.947 MW, was einem Anteil von 15,2 – 15,9% entspricht;

-erneuerbare Energiequellen außer Wasserkraft (Windkraft, Solarenergie, Biomasse, etc.) 20.416 – 23.332 MW, was einem Anteil von 21,8 – 23,7% entspricht; und

-Stromimporte 3.853 – 4.453 MW, was einem Anteil von 3,4 – 4,1% entspricht.

Der Nationale Energieentwicklungsplan 8 fördert die Entwicklung von Windenergie, autarker Solarenergie. Dies bezieht sich nur auf den Verbrauch vor Ort, nicht die Stromerzeugung im nationalen Netz. Zudem wird die Produktion neuer Energieformen wie die von Wasserstoff, grünen Ammoniak usw. unterstützt. Solche Formen werden ohne Kapazitätsbegrenzung entwickelt, nicht durch die Quellenstruktur im Plan begrenzt und mit der Planung ergänzt, wenn es einen umsetzbaren Vorschlag gibt.

– Entwicklung der Solarenergie

Hinsichtlich der Entwicklung von Solarenergiequellen, einschließlich konzentrierter Quellen, die auf dem Boden und Seeoberflächen installiert sind, und verteilter Quellen, die auf dem Dach installiert sind soll die Gesamtkapazität der Solarenergiequellen 2025 etwa 16.491 MW betragen und bis 2030 unverändert bleiben. 2045 soll sie etwa 74.741 – 96.666 MW betragen. Es wird erwartet, dass die aus Solarenergie erzeugte Elektrizität im Jahr 2025 einen Anteil von etwa 6,8 bis 7,0 %, im Jahr 2030 etwa 4,5 bis 4,8 % und im Jahr 2045 11,1 bis 12,1 % haben wird.

– Entwicklung der Windenergie

Die Gesamtkapazität der Onshore- und Nearshore-Windenergie soll bis 2025 etwa 10.700 – 13.616 MW, bis 2030 etwa 11.700-16.121 MW und bis 2045 etwa 36.170 – 55.950 MW betragen. Die Gesamtkapazität der Offshore-Windenergie ist 2030 mit 7.000 MW oder möglicherweise mehr angesetzt, wenn die wirtschaftlichen und technischen Bedingungen es erlauben. Im Jahr 2045 soll diese Kapazität bei 30.000 – 64.500 MW liegen. Es wird erwartet, dass die gesamte Stromerzeugung aus Windenergie im Jahr 2025 etwa 14,4 – 15,7%, im Jahr 2030 etwa 10,3 – 15,6% und im Jahr 2045 etwa 31,2 – 43,2% betragen wird.

– Entwicklung von LNG-Strom

Projekte in Hai Phong wurden aus der Planung gestrichen.

Für Wärmekraft unter Verwendung von im Inland erzeugtem Gas (dies umfasst Gasturbinen-Wärmekraftwerke) und LNG (ohne flexible Gasturbinen-Kraftwerke, die LNG verwenden) wurde festgelegt, dass bis 2030 die installierte Gesamtkapazität etwa 29.730 – 38.830 MW betragen wird. Es sollen 133,1 – 172,3 Mrd. kWh erzeugt werden, was 24,1 – 28,9% der gesamten Stromerzeugung entspricht. 2045 wird die installierte Gesamtkapazität etwa 43.330 – 46.330 MW betragen und 233,6 – 246,0 Mrd. kWh erzeugen, was 20,1 – 23,9% der gesamten Stromerzeugung entspricht.

Liste der LNG-Wärmekraftwerke

– Entwicklung der Kohlekraftwerke

Im Nationalen Entwicklungsplan 8 wurde die Ersetzung von Kohlekraftwerksprojekten angesichts der Verpflichtungen Vietnams im Rahmen der UN-Klimakonferenz 2021 geprüft. Die Planung von Kohlekraftwerksprojekten, die im Nationalen Energieentwicklungsplan genehmigt sind, aber von der Gemeinde nicht unterstützt werden oder nicht für die Entwicklung in Frage kommen, wurde nicht mehr berücksichtigt.

Einige Projekte, die für die Umstellung auf LNG vorgeschlagen wurden, wie z.B.: Vung Ang III, Quang Trach II, Quynh Lap I, II, und Long Phu II, III wurden gestrichen. Die BOT-Projekte Nam Dinh 1 und Quang Tri I bleiben jedoch in der Planung.

Wenn Sie Fragen haben oder weitere Einzelheiten zu den oben genannten Punkten erfahren möchten, zögern Sie bitte nicht, sich mit Dr. Oliver Massmann unter omassmann@duanemorris.com in Verbindung zu setzen.
Dr. Oliver Massmann ist General Director bei Duane Morris Vietnam LLC.

Despite complicated Covid-19 situation in Vietnam that resulted in almost nation-wide lockdown, foreign direct investment in Vietnam reached USD 31,15 billion, an increase of 9.2% compared to 2020 (figures from the General Department of Statistics). This 2022, with all Covid-19 restrictions removed, Vietnam is ready to fully welcome foreign investors. As of March 2022, the processing and manufacturing industry leads the chart of attracting the most foreign direct investment. Other investment fields offering investment opportunities to foreign investors include generation and distribution of electricity, mining, logistics and textile.

Beside government-issued incentives like reduced land levy, tax, allowance for 100% ownership… foreign investors must make use of benefits available for them under bilateral and multilateral agreements. As of now, Vietnam has concluded 15 free trade agreements, the most recent being the CPTPP and the EVFTA.

Some notable provisions under the CPTPP and EVFTA that foreign investors should know:

Government procurement

Vietnam has one of the highest ratios of public investment-to-GDP in the world (39 per cent annually from 1995). However, until the enforcement of the EVFTA, Vietnam has not agreed to its government procurement being covered by the Government Procurement Agreement (GPA) of the WTO.

Vietnam’s commitments on Government procurement mainly deal with the obligation 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. The EVFTA 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.

Investment Dispute Settlement

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.

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.

Vietnam’s obligations on Trade in Services and Investment under CPTPP

– Minimum standard of treatment: Each Party shall accord to covered investments treatment in accordance with applicable customary international law principles, including fair and equitable treatment and full protection and security.

– Expropriation: When necessary, for example, for a public purpose, government of one country has the right to expropriate foreign investors. Nonetheless, such right must be applied on a non-discriminatory manner and on payment of prompt, adequate and effective compensation in accordance with due process of law and provisions of CPTPP.

– Transfer: Foreign investors have the rights to freely transfer their capital contributions or profit of investment. Nonetheless, in some cases, governments of CPTPP member countries can prevent or delay such transfers of foreign investors for the purpose of control capital in case of balance of payment crisis or economic crisis.

– Not impose “performance requirement” (PR): One country shall not maintain performance requirements as a condition for investors to gain investment licenses or other preferential investment treatment.

– Not impose requirement on appointing senior management position (SMB): One country shall not require an enterprise to appoint to a senior management position a natural person of any particular nationality.

Free Trade Agreements create sustainable growth and mutual benefits for parties involved, and foreign investors should understand what they are entitled to under the Agreements to achieve the maximum level of legal certainty when investing 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.