Month: April 2024

I. VAT and Customs

In many cases, the principal in the contract manufacturing relationship owns some or all of the raw materials, work-in-process and finished goods throughout the manufacturing process. The principal and many of the suppliers are typically outside of the manufacturing jurisdiction.

1. What Are The VAT, Customs And Related Costs (e.g. Broker Fees) That Arise When A Foreign Principal Has Goods Drop-shipped Into Your Jurisdiction To The Local Contract Manufacturer? In Particular, Is There Any Non-recoverable VAT? Are There Strategies For Avoiding Or Reducing This VAT Cost?

Most regulations on the Vietnamese VAT regime are included in the Law on Value Added Tax No. 13/2008/QH12 of the National Assembly, as amended by Law No. 31/2013/QH13 and Law No. 71/2014/QH13.
Under Article 17.3 of the Law on Tax Management 2019, importers are obliged to pay tax in full and in a timely manner, including the VAT.
This norm includes the concept of drop shipping, which means an arrangement between a seller and the manufacturer or distributor of a product to be sold. According to the arrangement, the product will be shipped to the buyer directly by the manufacturer or distributor and not by the seller. This definition can be understood as an alternative form of import. The law does not make any differences on the way that goods are delivered. Therefore drop shipping is not subject to tax exemptions or reductions.
It should be noted that no VAT is raised for goods in transit or transhipment or crossing Vietnamese borders as well as goods temporarily imported and re-exported and goods temporarily exported and re-imported. There are no further special regulations for drop shipping supplies.

2. In Many Cases The Principal Supplies Equipment That The Local Contract Manufacturer Uses In The Manufacturing Process. This Equipment May Remain In The Local Jurisdiction For A Substantial Period Of Time. Any Addition VAT Or Customs Issues That Are Unique To The Capital Equipment That The Principal May Import?

Capital equipment is not subject to the catalogue of VAT exemptions. According to the Law on Amendments to the Law on Value Added Tax 2013, the following objects are exceptionally not subject to VAT: “Machinery, equipment, parts, and materials that cannot be produced at home and need to be imported to serve scientific research, technological development; machinery, equipment, parts, specialized vehicles, and materials that cannot be produced at home and need to be imported to serve petroleum exploration; airplanes, oil rigs, and ships that cannot be produced at home and must be imported to form fixed assets, or need to be hired from foreign partners to serve production, business, or to lease back.”

3. Have There Been Any Recent Developments That Impact The VAT, Customs And Related Costs Applicable To Such Structures?

On 25 March 2015, the Ministry of Finance issued Circular No. 38/2015/TT-BTC, according to which machinery and equipment suitable for investment field, target, and scale of the investment project, satisfying other certain conditions, imported as fixed assets of investment projects in the fields or areas eligible for preferential import tax are exempted from taxes.
Vietnam’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 14 January 2019 and its ratification of the EU-Vietnam Free Trade Agreement (EVFTA) on 1 August 2020 have eliminated import and export taxes for numerous tariff lines. For instance, nearly 100% of Vietnam’s exports to the EU will be eliminated import tax after the 10-year journey of EVFTA. So far, this is the highest level of commitment a partner gives Vietnam in a trade agreement. This is especially meaningful when the EU has been one of the two largest export markets of the country.

II. Permanent Establishment

1. As Noted Above, The Principal May Own Raw Materials, Work-In-Process And Finished Goods In The Local Jurisdiction. Is There Any Significant Risk That The Principal Could Have A Local PE Due To The Fact That It Has Such Inventory In The Country? Does It Matter Whether The Principal Has A Local Warehouse?

In Vietnam companies overseas conducting business activities through resident establishments in Vietnam are liable to pay corporate income tax.

According to the definition in Article 2.3 of the Law on Corporate Income Tax, Resident establishment means a business establishment through which a company overseas conducts all or a part of its business activities in Vietnam. A resident establishment of a company overseas can take different forms that are listed in the Law on Corporate Income Tax.

This list includes a representative in Vietnam that has authority to enter into contracts in the name of the oversea company or a representative that is not competent to enter into contracts on behalf of the foreign company but regularly engage in delivery of goods or provision of services in Vietnam.

This very broad reference might also include principals with assets as named above. These elements are not likely to form the risk of a permanent establishment in Vietnam but the authorities decide about permanent establishments on a case-by-case basis.

Where a treaty on avoidance of double taxation to which the Socialist Republic of Vietnam is a signatory contains different provisions relating to resident establishments, such treaty shall prevail over local laws as determined therein.

2. Does The Answer Change If The Principal Also Owns Capital Equipment That It Has Provided To The Local Contract Manufacturer?

The ownership of capital by the principal does not necessarily bear the risk of a permanent establishment.

3. In Many Cases The Local Contract Manufacturer Purchases The Raw Materials (Either In Its Own Name Or As A Purchasing Agent Acting On Behalf Of The Principal) Because It Knows The Production Schedule Better Than The Principal. In Addition, In Some Cases The Contract Manufacturer May Have More Leverage With The Suppliers. Please Address Any Additional PE Issues That May Arise If The Contract Manufacturer Also Acts As A Purchasing Agent On Behalf Of The Principal.

The Law on Corporate Income Tax provides that the business conducted by a company overseas can be regarded as a resident establishment if the company has an agent that has authority to enter into contracts in the name of the company overseas. Given this the situation above might likely give rise to a PE.

4. In Certain Cases, The Principal Will Have Its Own Employees Or Agents In The Factory To Supervise The Contract Manufacturer, Provide Quality Assurance And Sometimes Technical Information. To What Extent Would Independent Or Dependent Agents (That Do Not Have Contract Concluding Authority) Providing Such Services, Combined With The Other Facts Set Forth Above, Result In A PE For The Principal. To The Extent That Actual Employees Or Staff May Result In A PE, Can The Principal Avoid The PE By Forming A Local Subsidiary To Employee The Staff? If So, Can The Subsidiary Be Compensated On A Cost Plus Basis?

Considering the aforementioned definition of a resident establishment under Law on Corporate Income Tax, if the principal wants to avoid having a PE issue, he/she might establish a Representative Office [“RO”] to perform the tasks named above. This is possible as long as the RO is not doing business.

According Commercial Law and its guiding Decrees, any foreign business entity that has lawful business registration in accordance with the law of the foreign country and has operated for at least 01 (one) year shall be issued with a license to establish a representative office in Vietnam.

5. To The Extent That A PE May Arise In Any Of The General Fact Patters Described Above, Comment On Whether Additional Income Would Be Attributable To The PE. Can The Principal Argue That It Has Paid An Arm’s Length Gee Such That There Is No Additional Income That Such Be Taxed In The Jurisdiction? If So, What Transfer Pricing Methodologies Would Typically Be Used To Determine The Amount Of Income Attributable To The PE?

If there are no special rules in tax agreements, the principal can calculate on an arm’s length basis.

The Ministry of Finance has released a Circular on Transfer Pricing that requires companies to make a full self-assessment of their profits, calculated on an arm’s length basis. According to this Circular, companies will be required to declare the related party transactions in a prescribed form and submit it within 90 days from the year end. Furthermore, the Circular provides an obligation for companies to maintain transfer-pricing documentation to set out the evidence that they have taken place on arm’s length terms.

If companies fail to comply with these terms they risk double taxation and penalties.

III. Local Incentives

1. Is The Taxpayer’s Ability To Obtain A Tax Incentive Or Holiday Diminished By Operating Under A Risk-Stripped Structure Where The Local Entity Receives Cost Plus Remuneration?

Exemptions from and reductions of Corporate Income Tax are listed in Law on Corporate Income Tax 2008, Circular 78/2014/TT-BTC, Circular 151/2014/TT-BTC and Circular 96/2015/TT-BTC.
Tax incentives are provided in cases of encouraged investments. This term covers enterprises located in special export processing zones, enterprises that export a certain percentage of the manufactured goods or enterprises with a certain number of Vietnamese employees or laborers.

The contract manufacturer may carry forward their losses of a financial year to offset against future profits for a maximum of 5 years after the year incurring loss. The enterprise can freely choose how to allocate the loss to the later 5 years. When the 5 years period has lapsed but the loss has not been fully carried forward, the loss cannot be carried forward to the next year.

2. Is The Taxpayer’s Ability To Obtain A Tax Incentive Diminished By The Lack Of Locally Owned Intangible Property?

Vietnam tax law does not address this issue.

3. Are There Any Other Aspects In Contract Manufacturing Structures That May Impact A Taxpayer’s Ability To Obtain A Tax Incentive Or Holiday?

Law on Investment 2021 and its guiding Decree No. 31/2021/ND-CP include an extensive list of projects entitled to tax incentives. Depending on the project’s location, business lines, number of employees, etc., the tax incentives include exemption or reduction of CIT, import tax or land rental fees.

IV. Conversion And Transfer Pricing Issues

In many cases, U.S. and European multinationals initially establish their local manufacturing operations in Asia as buy/sell entities because they have a local income tax holiday or exemption of some kind for a period of years. The local entity may even own intangibles and bears risk. When the local holiday or exemption ends (or the CFO decides the tax rate is too high), the parent may wish to convert the local entity into a contract manufacturer for a principal in a low-tax jurisdiction to reduce the income earned locally.

1. In Some Jurisdictions, The Local Authorities May Find That The Local Entity Owns Some Goodwill Or Going Concern Value As A Result Of Its Historic Operations. The Authorities May Assert Capital Gains Tax And Possibly Dividend Withholding Tax On Value Of The Goodwill Or Going Concern Value On The Theory That The New Principal Is Somehow Acquiring The Goodwill Or Going Concern Value In Connection With The Conversion. Is This An Issue In Your Jurisdiction? If So, What Planning Steps Can Be Taken To Minimize This Cost?

This issue is not relevant in Vietnam.

2. In Many Cases, The Local Contract Manufacturer Is A Wholly-Owned Subsidiary Of The Principal. In Such Cases, The Principal May Wish To Compensate The Contract Manufacturer On A Cost Plus Basis, With The Uplift Being A Percentage Of The Manufacturing Costs (And Not The Value Of The End Product). Is This Approach Viable In Your Jurisdiction and What Issues/Exposures Arise In Connection With The Use Of Cost Plus Transfer Pricing?

Transfer pricing rules in Vietnam require that the enterprise pays and Vietnam receives a reasonable rate of return on its activities as if the parties were unrelated [the arm’s length principle]. Vietnamese tax law does not provide special rules regarding cost plus transfer pricing.

For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.

1) Your perspective on the existing PPP law, four years after it’s introduction.

[Answer] The existing PPP law was issued to ensure the complete legal framework for PPP projects and to encourage PPP investment. However, four years after its introduction, the number of PPP projects does not match its initial expectation. This is due to the fact that the existing PPP law does not provide the clearest regulations for private investors to make their investment decisions and I do believe that amendments are needed at this point.

2) Areas where existing law needs to be improved or strengthened to improve the attractiveness of the PPP market in Vietnam for private sector investors.

[Answer] In my opinion, the following areas should be improved to improve the attractiveness of the PPP market in Vietnam for private sector investors:
(i) The risk-sharing and profit-sharing mechanism between the State and the private sector investor. Currently, it appears that the existing provisions do not clearly address the issues on risk-sharing and profit-sharing for private investors in specific cases. Thus, many private investors still find it risky to make their decision;
(ii) Specific rights of the private sector investors in relation to PPP projects, i.e. rights to enjoy benefits and ownership rights (where applicable);
(iii) Private sector investors’ sources of capital to make investment. For further details, according to the existing PPP law, the private investor must first use its owner equity and borrowed capital to make the investment.
(iv) The dispute resolution mechanism between the State and the investor.

3) Your views on the earlier Build-Transfer (BT) model PPPs employed in Vietnam, which I’ve been told were very exposed to corruption.

[Answer] I do share the same view that BT model can be very easily exposed to corruption due to its nature.

4) Your views on the proposed return of the BT-style PPPs in Hanoi and Ho Chi Minh City, as has recently been proposed by the National Assembly.

[Answer] As Hanoi and HCMCM are the two most dynamic cities in Vietnam, it is important that special mechanism be applied to ensure the twos’ development. However, a concrete legal framework for BT model must be first issued to ensure the transparency and workability of this model in Hanoi and HCMCM.

5) Any other insights into the difficulties faced by both local and international private players regarding the existing PPP structure in Vietnam.

[Answer] Please refer to my answer in Question 2. I do think that the mentioned issues must be addressed as soon as possible.

6) Any other insights into proposed changes – if you are aware of what might be introduced as part of the next PPP law, which supposedly is due in 2025.

[Answer] To my best knowledge, the Draft Amended PPP Law has not been shared to the public. In the case of any further progress, I will keep you posted.

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

To address the yet-to-be-addressed legal issues from the National Power Development Plan VIII (PDP 8) regarding rooftop solar power projects, on 9 April 2024, the MOIT proposed the Draft Decree on development of rooftop solar power (Draft Decree) to the Government. The Draft Decree introduces the following notable provisions:

(i) Scope of application: According to Article 1 of the Draft Decree, the Decree will only regulate rooftop solar power projects for the self-consumption purposes.

(ii) Definition of rooftop solar power (RTS) system: Unlike Decision No. 13/2020/QD-TTg of the Prime Minister on incentives for development of solar power in Vietnam where RTS system is defined to have the maximum capacity of less than 1MW, the Draft Decree provides that there should be no maximum capacity for RTS system. In other words, RTS System with the maximum capacity exceeding 1MW can be recognized and regulated under this Decree.

(iii) Investment models: The Draft Decree regulates both grid-connected and off-the-grid RTS systems whereby (iii1) grid-connected systems must adhere to the planned capacity under the PDP 8 while any electricity surplus can be exported to the grid free of charge and (iii2) off-the-grid systems are not subject to the planned capacity while no electricity surplus can be exported to the grid. It is worth noting that grid-connected projects, under the Draft Decree, require registration with the local competent authority regading investment, trade, construction, fire prevention and fighting, and environment aspects of such projects. On the other hand, off-the-grid projects are not required to be registered but notification to the corresponding provincial People’s Committee before operation is required.

(iv) Incentives: For investors making their investment into RTS systems under the Draft Decree, such investors are entitled to the following incentives (iv1) not being required to convert the land use purpose; (iv2) not being required to include the RTS systems into the national power plan; and (iv3) tax incentives according to the prevailing regulations on tax.

In conclusion, the Draft Decree provides regulations and policies to encourage the implementation of RTS systems for self-consumption purposes. However, there remain unclear issues, i.e. the coverage of DPPA scheme, FOL requirement that need to be addressed in the next draft/official Decree. It is expected that the official Decree can be issued within this year or early 2025.
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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.

Der vietnamesische Premierminister stimmte am 01.04.2024 dem Plan für die Implementierung des Plans über die nationale Energieentwicklung bis 2030, mit einer Zukunftsvision bis 2050 (“Plan for Implementation of National Power Development Plan to 2030, with a vision to 2050 – “PDP8”) zu. Bitte nehmen im Folgenden unsere Hauptpunkte zur Kenntnis:
Am 01.04.2024 fertigte der Premierminister die Entscheidung Nr. 262/QD-TTg aus, die dem Plan für die Implementierung von PDP8 (den “Implementierungsplan”) zustimmte. Einige ausgewählte Auszüge:
• Der Implementierungsplan stellt spezifische Aufgaben und Aufträge für die Fachressorts auf, um von nun an bis zum Jahr 2025 PDP8 zu koordinieren und implementieren. Beispielsweise wird ein Zeitrahmen für die Einführung neuer, priorisierter Regelungen festgelegt.

• Der Implementierungsplan liefert keine Richtlinien, um bereits bestehende Probleme und Bedenken hinsichtlich der Bankfähigkeit von Energieprojekten zu lösen, wie die Identifikation eines Mechanismusses zur Investorenauswahl, Einspeisetarife, Regelungen zur Förderung der Entwicklung von erneuerbare Energien-Projekten oder Vorlagen für bankfähige Transaktionen.
• Der Implementierungsplan listet wichtige Energieerzeugungsprojekte auf, die unten näher beschrieben werden. Jedoch verstehen wir Quellen im Ministerium von Industrie und Handel (“MOIT”) dahingehend, dass das MOIT bisher noch nicht alle erforderlichen Informationen von allen provinziellen Volkskomitees gesammelt hat, um alle relevanten Listen von Energieprojekten zu vollenden.
A. WICHTIGE ENERGIEERZEUGUNGSPROJEKTE
Der Implementierungsplan behält die geplante Gesamtkapazität von wichtigen Erzeugungsquellen im Einklang mit PDP8 bei. Jedoch listen die Zeitpläne zu dem Implementierungsplan die genau erwarteten Betriebsjahre von relevanten Energieprojekten auf (anstelle der allgemeineren Jahresintervalle, die in PDP8 offenbart wird) und den Fortschritt auf dem Weg zur Fertigstellung jedes einzelnen Projekts.
Die Gesamtkapazität der wichtigen Energieerzeugungsprojekte bis zum Jahr 2030 wurde folgendermaßen bewilligt:
Erzeugungsquellen Kapazität
Inländische Gaswäremkraft 14,930 MW
LNG Wärmekraft 22,400 MW
Kohlekraft 30,127 MW
Heizkraftenergiequellen; Energiequellen, die Restwärme, Gichtgas und Nebenprodukte der Technologielinien nutzen 2,700 MW
Wasserkraft 29,346 MW
Pumpspeicherkraftwerke 2,400 MW

B. Erneuerbare Energien-Projekte
1. Windkraftanlagen
Die bewilligte Kapazität für Offshore-Windkraftanlagen beträgt 6.000 MW bis zum Jahr 2030 in Übereinstimmung mit PDP8. Der Implementierungsplan listet die genehmigten Offshore-Windkraftanlagen nicht auf. Stattdessen ordnet die Liste die genehmigte Kapazität den vietnamesischen Regionen bis 2030 zu, beispielsweise der nördlichen Region (2.500 MW), Südlichen Region (1.000 MW), der Südlichen Zentralregion (2.000 MW) und der Zentralen Mitte (500 MW).
Die bewilligte Kapazität von Landwindkraftanlagen (einschließlich küstennaher Windkraftanlagen) beträgt 21.880 MW bis zum Jahr 2030. Der Implementierungsplan stellt eine Liste von Landwindkraftanlagen mit der jeweiligen Kapazität, dem jeweiligen Standort, den jeweils zu erwarteten Betriebsjahren (Dauer) sowie dem gegenwärtigen Status zur Verfügung.
2. Solarenergieanlagen
Die Gesamtkapazität von dachgestützten Solarenergieanlagen (für den Selbstverbrauch) soll bis zum Jahr 2030 um 2.600 MW erhöht werden.
Es gibt keine Liste von dachgestützten Solarenergieanlagen. Jedoch behält der Implementierungsplan die in PDP8 bereitgestellte Liste von Solarenergieanlagen bei, die nach 2030 ausgeführt werden sollen (aber zwischen 2024 – 2030 ausgeführt warden könnten, wenn die Elektrizität selbst verbraucht wird).
3. Sonstige Energiequellen bis zum Jahr 2030
Der Implementierungsplan stellt ein Ziel von 300 MW für flexible Energiequellen auf. Dieses Ziel wurde festgelegt, um die bereits existierende Energienetzinfrarstruktur auszunutzen. Der Zweck liegt darin, Gebiete mit einem potenziellen Mangel an ungenutzter Kapazität zu unterstützen.
Der Implementierungsplan enthält eine Entscheidung für den Import einer Stromkapazität von ungefähr 5.000 MW aus Laos, welche auf 8.000 MW erhöht werden kann, wenn günstige Bedingungen (einschließlich vernünftiger Strompreise). Der Minister für Industrie und Handel wird angewiesen, dem Premierminister zu berichten, um wichtige Richtlinien und synchrone Netzanschlusspläne für jedes einzelne Projekt zu erwägen und über diese zu entscheiden.

C. PRIORISIERTE RECHTLICHE RAHMENBEDINGUNGEN BIS ZUM JAHR 2025
Der Implementierungsplan sieht vor, die folgenden Gesetze und Regelungen zu entwickeln, um PDP8 von jetzt bis 2025 durchzuführen:
– Preisspanne für Stromimport aus Laos;
– Preisspannen für die Stromerzeugung;
– Mechanismus der direkten Stromkaufvereinbarung;
– Regelungen zur Förderung der Entwicklung von dachgestützten Solarenergieanlagen zum Selbstverbrauch;
– Geändertes Elektrizitätsgesetz und geändertes Gesetz zur effizienten Energienutzung; und
– Mechanismus zur Entwicklung eines Markts für Emissionsgutschriften.
Es ist erwähnenswert, dass der Implementierungsplan auch relevanten Fachressorts zuweist, die Regelungen zu überprüfen und andere Regelungen zu entwickeln, um die rechtlichen Rahmenbedingungen für die Entwicklung der Stromerzeugung, der erneuerbaren Energie und des Übertragsnetzes bis zum Jahr 2030, wie von PDP8 verlangt, zu vollenden
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Bitte zögern Sie nicht, Dr. Oliver Massmann unter omassmann@duanemorris.com oder einen an-deren Anwalt unserer Kanzlei zu kontaktieren, wenn Sie Fragen hinsichtlich dieser Punkte haben. Dr. Oliver Massmann ist der Generaldirektor von Duane Morris Vietnam LLC.

By Dr. Oliver Massmann and Duane Morris team

The Prime Minister of Vietnam on April 1, 2024 approved the Plan for Implementation of National Power Development Plan to 2030, with a vision to 2050 (“PDP8”). Please kindly find below our key highlights.

On April 1, 2024, the Prime Minister issued Decision No. 262/QD-TTg approving the Plan for Implementation of PDP8 (the “Implementation Plan”). Some take-aways:
• The Implementation Plan sets out specific tasks and assignments for the line ministries to coordinate and implement PDP8 from now through 2025. For example, it sets out a timeline for adoption of new prioritized regulations.

• The Implementation Plan does not provide guidelines to address existing issues and concerns over power project bankability such as identifying a mechanism for selection of investors, feed-in tariffs, regulations for encouragement of development of renewable energy projects or bankable transaction templates.
• The Implementation Plan lists important power generation projects as described further below, however we understand from sources in the Ministry of Industry and Trade (“MOIT”) that the MOIT has not yet collected all necessary information from all provincial People’s Committees to finalize all relevant lists of power projects.

A. IMPORTANT POWER GENERATION PROJECTS

The Implementation Plan maintains the planned total capacity of important generation sources in line with PDP8. However, schedules to the Implementation Plan list the exact expected operating years of relevant power projects (instead of the more generic year range as disclosed in PDP8) and the progress toward completion of each project.
The total important power generation projects capacity up to 2030 is approved as follows:
Generation Sources Capacity
Domestic gas thermal power capacity 14,930 MW
LNG thermal power capacity 22,400 MW
Coal-fired power capacity 30,127 MW
Cogeneration power sources, power sources using residual heat, blast furnace gas, and by-products of the technology line 2,700 MW
Hydropower capacity 29,346 MW
Pumped storage hydropower capacity 2,400 MW

B. RENEWABLE ENERGY PROJECTS

1. Wind Power Projects
Approved capacity for offshore wind power projects is 6,000 MW by 2030 in line with PDP8. The Implementation Plan does not list the approved offshore wind power projects. Instead, the list allocates the approved capacity to regions of Vietnam by 2030, i.e., Northern region (2,500 MW), Southern region (1,000 MW), Southern Central region (2,000 MW) and Central Middle (500 MW).
Approved capacity of onshore wind power projects (including nearshore wind power projects) is 21,880 MW by 2030. The Implementation Plan provides a list of onshore wind power projects with respective capacity, location, expected operation years (period) and current status.
2. Solar Power Projects
Total capacity of rooftop solar power projects (for self-consumption) is increased by 2,600 MW by 2030.
There is no list of rooftop solar power projects. However, the Implementation Plan maintains the same list of solar power projects to be implemented after 2030 (but could be conducted within 2024-2030 if the electricity is self-consumed) as provided in PDP8.
3. Other types of power sources until 2030
The Implementation Plan sets a target of 300 MW for flexible power sources. This target is stated as intended to take advantage of existing power grid infrastructure. The purpose is to remediate areas with potential shortages of spare capacity.
The Implementation Plan includes a decision to import approximately 5,000 MW of electricity from Laos, which can be increased to 8,000 MW when there are favorable conditions including reasonable electricity prices. The Ministry of Industry and Trade is directed to report to the Prime Minister to consider and decide on import policies and synchronous grid connection plans for each specific project.

C. PRIORITIZED LEGAL FRAMEWORK UNTIL 2025

The Implementation Plan plans to develop the following laws and regulations to implement PDP8 from now through 2025:
– Price range for power importation from Laos;
– Power generation price ranges;
– Direct Power Purchase Agreement mechanism;
– Regulations for encouragement of development of rooftop solar power project for self-consumption;
– Amended Electricity Law and Amended Law on Efficient Use of Energy; and
– Mechanism for development of market of carbon credit.
It is worth noting that Implement Plan also assigns relevant line Ministries to review and develop other regulations to finalize the legal framework for development of power generation, renewable energy and transmission grids up to 2030 as required by PDP8.

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Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com or any other lawyer listed in our office list if you have any questions on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.