Author: Dr. Oliver Massmann

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Lawyer in Vietnam Oliver Massmann New Decree guiding the Law on Investment What you must know:

On 12 November 2015, after months of delay, the Government has finally issued Decree No. 118/2015/ND-CP (“New Decree”) on detailing and guiding the implementation of certain provisions of the Law on Investment.
Set out below are major worth-noting points in this New Decree:
Investment conditions for foreign investors
Investment conditions for foreign investors are defined as conditions that foreign investors must satisfy when investing in conditional business sectors applicable for foreign investors pursuant to Vietnam’s laws, ordinances, decrees and international treaties on investment.
These conditions include:
– Conditions on foreign ownership of charter capital in an economic organization;
– Conditions on investment form;
– Conditions on scope of investment activities;
– Conditions on a Vietnamese partner participating in investment activities; and
– Other conditions pursuant to laws, ordinances, decrees and international treaties on investment.
The above conditions must be satisfied when foreign investors:
– Making investment to establish an economic organization;
– Contributing capital, purchasing shares, capital contribution portion in an economic organization;
– Investing in the form of business cooperation contract;
– Receiving investment projects transferred from another investor or other cases of receiving transferred investment projects; or
– Amending or supplementing investment business lines or sectors of foreign invested economic organizations.
Conditional business sectors applicable for foreign investors as well as the corresponding conditions are not included in the New Decree but will be published on the National information gate on foreign investment. For business sectors whose conditions are not specified anywhere in Vietnam’s WTO Commitments and other international treaties on investment or not yet committed (“Uncommitted Sectors”), the investment registration authority must seek approval of the Ministry of Planning and Investment and other specialized ministries on the foreign investment.
It is worth noting that the New Decree recognizes ‘licensing precedent’, meaning where foreign investment in Uncommitted Sectors has been approved and such Uncommitted Sectors have been published on the National information gate on foreign investment, any later foreign investors making investment in the same Uncommitted Sectors will no longer need the approval of the specialized managing ministry.
Licensing procedures on investment registration and enterprise registration by foreign investors
Instead of go through 2 different steps, namely (1) applying for issuance of an Investment Registration Certificate; and (2) applying for issuance of an Enterprise Registration Certificate when establishing an enterprise in Vietnam, foreign investors now can apply for these two certificates at the same time. Specifically:
– Foreign investors submit the applications for issuance of an Investment Registration Certificate and an Enterprise Registration Certificate to the investment registration authority;
– Within 01 working day from the receipt of the applications, the investment registration authority sends the application for enterprise establishment registration to the Business Registration authority for review and notifying the investment registration authority of its decision;
– If there is any request for amendments or supplements to either the application for investment registration or enterprise establishment, the investment registration authority will provide the investors a single response within 5 working days from the receipt of the applications.
The coordination regime between the investment registration authority and the business registration authority will be detailed by the Ministry of Planning and Investment later.
Securing the implementation of an investment project
Investors that are granted, or leased land by the Government, or allowed by the Government to change the land use purpose, with certain exceptions, must make a deposit from 1-3% of the total investment capital recorded in a document approving the investment plan or in the Investment Registration Certificate based on a progressive basis, in particular:
– For capital part of up to VND300 billion, the deposit rate is 3%;
– For capital part from VND300 billion to VND1,000 billion, the deposit rate is 2%;
– For capital part from VND1,000 billion, the deposit rate is 1%.
M&A procedures

There is explicitly no requirement of application for Investment Registration Certificate in acquisitions of target companies by foreign investors.
However, foreign investors must register its acquisition of the target company if:
– They contribute capital to, purchase shares or capital contribution portion of an economic organization doing business in conditional sectors which are applicable for foreign investors;
– The capital contribution, shares and capital contribution portion result in F1, F2 and F2’ mentioned in the graph above holding 51% or more of the target company:
o Increasing foreign ownership rate from below 51% to more than 51%; and
o Increasing the existing foreign ownership rate of 51% to a higher ownership rate.
After completion of the acquisition, the target company must carry out procedures to change its members or shareholders at the business registration authority.
For investment of foreign investors other than F1, F2 and F2’, the target company only needs to carry out procedures to change its members or shareholders at the business registration authority without the foreign investors having to register the acquisition transaction with the investment authority.

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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.

Posted on by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann PUBLIC MERGERS AND ACQUISITIONS IN VIETNAM: MARKET ANALYSIS OVERVIEW

Largest / most noteworthy public M&A transactions in the past 12 months
IT and electronic equipment
In June 2014, Vietnam’s leading IT corporation, FPT Software, acquired RWE IT Slovakia, a subsidiary of the RWE Group (one of Europe’s leading utility companies). Therefore, RWE IT Slovakia will be 100% owned by FPT Software and be renamed FPT Slovakia. This deal is also the first M&A transaction of FPT and first M&A deal by a Vietnam ICT company outside Vietnam. However, the deal value has not been disclosed.
Oil gas and chemicals
In November 2014, SapuraKencana Petroleum Berhad (Malaysia) acquired the entire interest of Malaysia’s national oil company Petroliam Nasional Berhad (Petronas) in three blocks offshore from southern Vietnam for US$400 million after an international bidding process.
Financial
Noteworthy public M&A transactions include the following:
• In December 2014, Vietnam National Financial Switching JSC (Banknetvn) merged with Smartlink Card JSC (Smartlink). Banknetvn then became the only card switching company on the market in which the central bank holds 25% of the total shares.
• In May 2015, Sai Gon Thuong Tin Commercial Joint Stock Bank (more commonly known as Sacombank) merged with Southern Commercial Joint Stock Bank. Following the merger, Southern Bank shareholders obtained a 0.75 Sacombank share for each share they held. The merged entity, to be called Sacombank, will have a charter capital of more than VND18.85 trillion (US$856 million) and total assets of over VND290.86 trillion (US$13.2 billion). Sacombank’s shareholders agreed to the merger by a 93.7% vote.
• In May 2015, the merger between the Mekong Housing Bank and the Bank for Investment and Development of Vietnam was completed.
• In April 2015, Credit Saison spent about JPY5 billion to take a 49% stake in HDFinance, Vietnam’s third largest consumer finance business.
• In August 2015, the Mekong Development Bank (MDB) was set to merge with the Vietnam Maritime Commercial Bank (Maritime Bank) to form an institution that would be among the country’s five largest banks in terms of charter capital. Currently, Maritime Bank’s charter capital is US$373.8 million and MDB’s is US$175.23 million, meaning that the new banking institution would have a charter capital of US$549 million and total assets of US$5.28 billion.
• The Vietnam Bank for Industry and Trade (Vietinbank) will merge with Petrolimex Group Commercial Joint Stock Bank (PG Bank). The change rate for PG Bank shares to Vietinbank shares is 1:0.9, which means Vietinbank will exchange 270 million of its shares for 300 million of PG Bank shares. The merger will increase Vietinbank’s total assets by VND25 trillion (US$1.19 billion) to VND685 trillion (US$31.7 billion), and its chartered capital by VND3 trillion (US$142.86 million) to more than VND40 trillion (US$1.85 billion).
Mining, metals and engineering
In 2014, Vietnam Coal and Minerals Group (Vinacomin) sold 100% of its charter capital in Vietnam Coal – Mineral Single Member Financial Limited Company to Vietnam Prosperity Bank (VP Bank). The deal value has not been disclosed.
Pharmaceuticals, biotechnology and healthcare
In September 2014, Standard Chartered Private Equity successfully acquired a significant minority stake in An Giang Plant Protection JSC, a market leader in the Vietnam agricultural sector for US$90 million.
Other
Retail. Noteworthy public M&A deals include the following:
• In August 2014, Thailand’s Berli Jucker Public Company Limited (BJC) bought Metro Cash & Carry Vietnam in a deal valued at EUR655 million.
• Thailand’s Central Group completed the acquisition of 49% of the total shares in NKT New Technology and Solution Investment and Development Corporation, the owner of Nguyen Kim Trading Company. The deal value has not been disclosed.
• Vingroup bought 70% of the total shares in Ocean Retail Company, a member of Ocean Group that owns the OceanMart retail system in northern Vietnam, and renamed it VinMart Retail Group. The deal value is US$26 million.
Food. Noteworthy deals include the following:
• In April 2015, Masan Group announced the acquisition of stakes in two companies. It acquired 52% of the total shares in Vietnam French Cattle Feed JSC (Proconco) and 70% of the total shares in Agro Nutrition Company JSC (Anco). The acquisition occurred when the group bought 99.99% of the total shares in Sam Kim Limited Liability Company and renamed it Masan Nutri-Science Company.
• In May 2015, Filipino firm Pilmico Foods Corporation acquired some feed companies in Vietnam in an expansion bid. Pilmico, a subsidiary of the Aboitiz Group, had bought 70% of the total shares in Vinh Hoan 1 Feed JSC (VHF) at US$28 million in 2014.
• F&N Dairy Investments Pte Ltd holds 110.4 million shares of Vietnam Dairy Products Joint Stock Company (Vinamilk), equivalent to 11.04% of its charter capital. It is now the second largest shareholder of Vinamilk after the State Capital Investment Corporation (SCIC).
• Mondelēz International completed the acquisition of 80% of the total shares in Kinh Do Corporation, a popular snack business in Vietnam, for about US$370 million
Real estate. Noteworthy deals include the following:
• In January 2014, the Hong Kong-based Tung Shing Group acquired 53% of the total shares in Mövenpick Saigon Hotel in Phu Nhuan District, for approximately US$16 million.
• In March 2015, Lotte Group acquired 70% of the Diamond Plaza project. The building had benefited from an initial investment of about US$60 million. However, Lotte Group did not reveal the amount of money spent on the deal.
• In November 2014, Ho Chi Minh City-based property company, Novaland Joint Stock Company, bought some stalled projects, including Icon 56 and Galaxy 9 in District 4 and Lexington Residence in District 2, which had benefited from investments of about VND3 trillion (US$142.5 million).
• In June 2015, Gaw Capital Partners (GCP), the Hong Kong-based private equity firm, acquired an existing portfolio of real estate projects in Vietnam. The portfolio was purchased for US$106 million and is comprised of four of the remaining projects originally held under Indochina Land Holdings 2 Ltd.
• In early July 2015, Gamuda Land Vietnam, a division of Malaysian property developer Gamuda Berhad acquired Celadon City from the Saigon Thuong Tin Real Estate JSC (Sacomreal) and the Thanh Thanh Cong JSC (TTC) for an estimated VND1.4 trillion (US$64.1 million). The estimated original investment is VND24.8 trillion (US$1.1 billion).
• In 2015, Vingroup has become a dominant local M&A acquirer with a long list of transactions in the real estate, retail and logistics sectors. Its most notable additions include:
o Masteri Thao Dien for US$75 million;
o 30% stake ownership in Vinatex for US$26 million;
o 90% stake ownership in Giang Vo Trade Show Center for US$69 million; and
o 30% stake ownership in Hop Nhat Express for US$52 million.
• In November 2014, the US-based Global Emerging Markets Fund (GEM) agreed to acquire 10% of Hoang Anh Gia Lai, a Vietnamese plantation and real estate company, for US$80 million. GEM will obtain a board seat and will support the company potential listing on the international markets in the future.
Insurance. In April 2015, Canada-headquartered Fairfax Financial Holdings, through its subsidiary Fairfax Asia Limited, acquired about 35% of the total shares of the Bank for Investment and Development of Vietnam Insurance Joint Stock Corporation for US$50 million, therefore becoming a strategic investor in the firm.
The major trends in the structuring of public M&A transactions
In Vietnam, M&A transactions usually take the form of either share or asset acquisitions, with share acquisition transactions outnumbering asset acquisition transactions.
Share acquisitions by foreign purchasers are commonly structured as offshore direct investments. The new investor can:
• Acquire shares or capital contributions from an existing shareholder in the target (for example, a joint stock company, limited liability company, and so on).
• Subscribe for newly issued shares of the target (for a joint stock company).
• Make further capital contributions to the target (for a limited liability company).
In the case of an asset deal, a foreign purchaser must generally establish a new subsidiary in Vietnam.
In addition, M&A transactions can also take the form of a merger. One or more companies of the same type can be merged into another company by transferring all assets, rights, obligations and interests to the merged company, terminating the existence of the merging company.
The 2014 Enterprise Law sets out the types of business structuring that can be used by investors as a result of M&A transactions. In addition, the 2014 Investment Law is the first law that regulates M&A transactions and clearly provides that such transactions do not require an investment certificate. This change will hopefully end years of uncertainty and frustration faced by foreign investors seeking entry into the Vietnam market or expansion through M&A transactions. However, it is still early to assess the effectiveness of these laws, as they have only been implemented since July 2015, and their guiding documents have not been issued yet. This has left enterprise registration and licence amendments in limbo, particularly for enterprises that have obtained licences under the former Enterprise Law and Investment Law. This situation has a direct impact on M&A transactions.
The level/extent of private equity-backed bids in the past 12 months
Investment in the form of M&A transactions is still the most popular form compared with private equity investment. In recent months, private equity funds have been following the securities market in Vietnam, especially companies carrying out value chain operations. Consumer goods and infrastructure are the sectors that attract the most attention. However, due to limited publicly available information, it is not possible to fully assess the level of private equity-backed bids.
The approach of the competition regulator(s) in the past 12 months
The Vietnam Competition Authority under the Ministry of Industry and Trade (VCA) must be notified of the transaction if participating companies have a combined market share in the relevant market of 30% up to 50%. The VCA will then examine whether the calculation of the combined market share is correct and whether the transaction is prohibited (that is, whether the combined market share exceeds 50%, except in certain cases). The transaction can be conducted when the VCA issues a written confirmation that the transaction is not prohibited under competition law.
For more information on the VCA, see www.vca.gov.vn/Default.aspx?lg=2.
Main factors affecting the public M&A market over the next 12 months
The country’s deeper and wider integration into the world’s economy is offering new opportunities for M&A activities.
Another factor is the government’s target to equitise state-owned enterprises (SoEs). The Prime Minister approved the plan to turn 432 SoEs into joint stock companies in the 2014-2015 period. To date, 176 of such companies have been equitised. Initial public offerings by major SoEs have been creating new, attractive supplies to the M&A market. The restructuring of commercial banks and divestments from non-core business by SoEs have made the M&A market more attractive.
Encouraging signs for foreign investment include:
• Economic recovery.
• Reformed policies to allow wider access to foreign investors.
• The conclusion of free trade agreements (FTAs) and the Trans-Pacific Partnership (TPP).
• The bouncing back of the stock market.
• New regulations that increase the authorised levels of foreign investment in public listed companies.
The introduction of the new Investment Law, Enterprise Law and other laws and policies are creating an improved legal environment for investment and trade in general, and the M&A market in particular. However, the following factors also affect M&A transactions:
• Divergent interpretations and implementations by local licensing authorities of international treaties such as Vietnam’s WTO Commitments.
• Different licensing procedures applied to different types of transactions (for example, for foreign invested companies and domestic companies, public companies and private companies, and for buying state-owned shares or private shares).
Although legal and governance barriers, along with macro instability and the lack of market transparency are still the greatest concerns for investors, M&A deals in Vietnam are still expected to be one of the key, effective channels for market entry.
The major expected trends in the Vietnam M&A market include:
• Bank restructurings.
• Acquisitions and anti-acquisitions.
• Growing Japanese investment in Vietnam through M&A transactions.
• Reform of SoEs.
The derivatives market is expected to open in 2016, which will help in preventing risks, boosting the growth of the stock market and in promoting M&A deals.

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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.

Posted on by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann Public Merger and Acquisitions in Vietnam

There has been a steady growth in M&A activities in Vietnam since Vietnam officially became a member of the World Trade Organization (WTO) in 2007. The first M&A wave in Vietnam occurred during the period between 2008 and 2013, with a reported total value of US$15 billion. Japanese investors made about US$1.2 billion worth of deals in 2012. Japan is the leading country for M&A deals in Vietnam in terms of both quantity and value. This helped the M&A market in Vietnam to reach a peak of US$5.1 billion in 2012. Fast-moving consumer goods are considered to be the most attractive sector, with a total value of M&A transactions up to US$1 billion, accounting for 25% of the total M&A value in Vietnam. The retail and real property sectors are also very active, with high value M&A deals. Vietnam’s M&A market experienced a strong recovery in 2014, with six deals being reportedly made every week. There were a total of 313 M&A deals in 2014, with a value of US$2.5 billion, a 15% increase compared with the previous year.
How to obtain control of a public company
The most common means of obtaining control over a public company are as follows:
The acquisition of shares/charter capital through:
buying shares/charter capital from the existing shareholders of the company;
buying shares/charter capital of a listed company on the stock exchange; and
public share purchase offer.
Through a merger. The 2014 Law on Enterprises sets out the procedures for company mergers by way of a transfer of all lawful assets, rights, obligations and interests to the merged company, and for the simultaneous termination of the merging companies.
Through the acquisition of assets.
There are restrictions on the purchase of shares/charter capital of local companies by foreign investors. In addition, the law does not yet allow merger or assets acquisition transactions where a foreign investor is a party.
Securities of public companies must be registered and deposited at the Vietnam Securities Depository Centre before being traded.
Depending on the numbers of shares purchased, an investor can become a controlling shareholder. Under the Vietnam Law on Securities, a shareholder that directly or indirectly owns 5% or more of the voting shares of an issuing organisation is a major shareholder. Any transactions that result in more than 10% ownership of the paid-up charter capital of the securities company must seek approval of the State Securities Commission (SSC).
What a bidder generally questions before making a bid
Before officially contacting the potential target, the bidder conducts a preliminary assessment based on publicly available information. The bidder then contacts the target, expresses its intention of buying shares/subscribing for its shares and the parties sign a confidentiality agreement before the due diligence process. The confidentiality agreement basically includes confidentiality obligations in performing the transaction. The enforcement of confidentiality agreements by courts in Vietnam remains untested.
A bidder’s legal due diligence usually covers the following matters:
Corporate details of the target and its subsidiaries, affiliates and other companies that form part of the target.
Contingent liabilities (from past or pending litigation).
Employment matters.
Contractual agreements of the target.
Statutory approvals and permits regarding the business activities of the target.
Insurance, tax, intellectual property, debts, and land-related issues.
Anti-trust, corruption and other regulatory issues.
Restrictions on shares transfer of key shareholders
Founding shareholders can only transfer their shares to other founding shareholders of the company within three years from the issuance of the Enterprise Registration Certificate. After then, the shares can be transferred freely. An internal approval of the general meeting of shareholders is always required if:
The company increases its capital by issuing new shares.
There is any share transfer of the founding shareholders within the above three-year period.
If the sale and purchase is a direct agreement between the company and the seller in relation to an issuance of shares, the selling price must be lower than the market price at the time of selling, or in the absence of a market price, the book value of the shares at the time of the approval plan to sell the shares. In addition, the selling price to foreign and domestic buyers must be the same.
When a tender offer is required
A tender offer is required in the following cases:
Purchase of a company’s circulating shares that results in a purchaser, with no shareholding or less than a 25% shareholding, acquiring a 25% shareholding or more.
Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% or more shareholding, acquiring a further 10% or more of circulating shares of the company.
Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% shareholding or more, acquiring a further 5% up to 10% of currently circulating shares of the company within less than one year from the date of completion of a previous offer.
There is no guidance on building a stake by using derivatives. In addition, the bidder cannot purchase shares or share purchase rights outside the offer process during the tender offer period.
The bidder must publicly announce the tender offer in three consecutive editions of one electronic newspaper or one written newspaper and (for a listed company only) on the relevant stock exchange within seven days from the receipt of the State Securities Commission’s (SSC’s) opinion regarding the registration of the tender offer. The tender offer can only be implemented after the SSC has provided its opinion, and following the public announcement by the bidder.
Making the bid public
The offer timetable is as follows:
The bidder prepares registration documents for its public bid to purchase shares.
The bidder sends the bid registration documents to the SSC for approval and, at the same time, sends the registration documents to the target.
The SSC reviews the tender documents within seven days.
The board of the target must send its opinions regarding the offer to the SSC and the shareholders of the target within 14 days from receipt of the tender documents.
The bid is announced in the mass media (although this is not a legal requirement).
The length of the offer period is between 30 and 60 days.
The bidder reports the results of the tender to the SSC within 10 days of completion.
Companies operating in specific sectors (such as banking, insurance, and so on) can be subject to a different timetable.
Form of consideration and minimum level of consideration
Under Vietnamese law, shares can be purchased by offering cash, gold, land use rights, intellectual property rights, technology, technical know-how or other assets. In practice, acquisitions are most commonly made for cash consideration.
In cases of full acquisition of state-owned enterprises, the first payment for the share purchase must not be less than 70% of the value of such shares, with the remaining amount being paid within 12 months.
In transactions involving auctions of shares by state-owned enterprises, the purchaser must make a deposit of 10% of the value of the shares registered for subscription based on the reserve price at least five working days before the auction date included in the target company’s rule. Additionally, the purchaser must transfer the entire consideration for the shares into the bank account of the body conducting the auction within ten working days of the announcement of the auction results.
In the case of a public tender offer, the payment and transfer of shares via a securities agent company appointed to act as an agent for the public tender offer must comply with Decree 58/2012/ND-CP.
Delisting a company
If a company seeks voluntarily de-listing, it must submit an application for de-listing that includes the following documents:
A request for de-listing.
For a joint stock company:
the shareholders’ general meeting approval of de-listing of the stock;
the board of directors’ approval of de-listing of bonds; and
the shareholders’ general meeting approval of de-listing of convertible bonds.
The members’ council (for a multi-member limited liability company) or the company’s owner (for a single member limited liability company) approval of de-listing of bonds.
For a securities investment fund, the investors’ congress approval of de-listing of the fund’s certificate.
For a public securities investment company, the shareholders’ general meeting approval of stock de-listing.
A listed company can only de-list its securities if de-listing is approved by a decision of the general meeting of shareholders passed by more than 50% of the voting shareholders who are not major shareholders.
If a company voluntarily de-lists from the Hanoi Stock Exchange or Ho Chi Minh Stock Exchange, the application for de-listing must also include a plan to deal with the interests of shareholders and investors. The Hanoi Stock Exchange or Ho Chi Minh Stock Exchange must consider the request for de-listing within ten and 15 days from the receipt of a valid application, respectively.
Transfer duties payable on the sale of shares in a company
Depending on whether the seller is an individual or a corporate entity, the following taxes will apply:
Capital gains tax. Capital gains tax is a form of income tax that is payable on any premium on the original investor’s actual contribution to capital or its costs to purchase such capital. Foreign companies and local corporate entities are subject to a corporate income tax of 22% (20% from 1 January 2016). However, if the assets transferred are securities, a foreign corporate seller is subject to corporate income tax of 0.1% on the gross transfer price.
Personal income tax. If the seller is an individual resident, personal income tax will be imposed at the rate of 20% of the gains made, and 0.1% on the sales price if the transferred assets are securities. An individual tax resident is defined as a person who:
stays in Vietnam for 183 days or longer within a calendar year;
stays in Vietnam for a period of 12 consecutive months from his arrival in Vietnam;
has a registered permanent residence in Vietnam; or
rents a house in Vietnam under a lease contract of a term of at least 90 days in a tax year.
If the seller is an individual non-resident, he is subject to personal income tax at 0.1% on the gross transfer price, regardless of whether there is any capital gain.
Payment of the above transfer taxes is mandatory in Vietnam.
Restrictions on repatriation of profits and/ or foreign exchange rules for foreign companies
If the target company in Vietnam already has an investment certificate, it must open a direct investment capital account at a licensed bank in Vietnam. Payment for a share purchase by a foreign investor must be conducted through this account. The account can be denominated in Vietnamese dong or a foreign currency. In addition, if the foreign investor is an offshore investor, it will also need to open a capital account at a commercial bank operating in Vietnam to carry out the payment on the seller’s account and receive profits.
If the target company in Vietnam does not have an investment certificate, the foreign investor will need to open an indirect investment capital account for payment to the seller and remittance of profits.

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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.

Posted on by Dr. Oliver Massmann

ベトナムでの弁護士　オリバー　マスマン TPP協定の最新ニュース ベトナムは最大の利益を得る国

7月下旬ハワイでの合意に失敗し先送りとなっていたTPP交渉が2015年10月5日の月曜に5日間に及ぶ協議の末、大筋合意に達しました。

TPPは世界最大の国がいくつか含まれ、世界のGDPの約40％また世界貿易の3分の1を占め、参加国の年間国内総生産は28兆ドルに達するこれまでに協議されている大規模な貿易協定の中の１つです。交渉参加国はアジア太平洋地域全体が含まれ、オーストラリア、ブルネイ、カナダ、チリ、日本、マレーシア、メキシコ、ニュージーランド、ペルー、シンガポール、米国そしてベトナムが加盟国となっています。TPPは21世紀貿易協定と言われ、地域世界貿易投資に関する雛形となり、次世代問題を具体化しています。

TPPでは電子商取引、金融サービス、国境電子通信サービスなどの近年世界貿易の障害となっているいくつかの貿易問題に取り組んでいます。その他の分野横断的な問題は経済上の国営企業の役割、政府調達などが挙げられます。

　ベトナムは米国と強く結びつくことでこの貿易協定で最大の利益を得る国となり、中国が徐々に競争上の優位性を失いつつある製造業などの分野で競争力が高くなると予想されています。ベトナムはまた日本、マレーシア、ブルネイ、ニュージーランドといった米国が正式な貿易協定を確立したいと望む国々の中の1国として考えられています。統計によるとTPPに参加することで、ベトナムのGDPが基礎シナリオよりさらに13.6％増加するでしょう。

TPPの主要ポイントは以下となります。
【自由貿易圏】関税割当は安価な海外製品から国内産業を守るための貿易措置として、また特に発展途上国の国々が利益を集める効率的な手段として長い間利用されてきました。しかし、関税割当はここ数年その他の非関税措置とあまり比較されなくなってきています。TPPでは、関税及び非関税障壁は商品やサービス分野の全ての取引で減少または実質的に除外されています。TPP締約国であるベトナムはこの貿易協定により今後ビジネスチャンスが増え市場参入などの多くの利益を得ることができると期待されています。

商品貿易
関税及び非関税障壁の減少や廃止により、雇用創出の増加また8億人規模の市場取引が増加すると見込まれています。ほとんどの関税撤廃がすぐに施行され、その他の商品にかかる関税は一定期間にわたり減少する予定です。農産物に対する規制的な政策の除外や削減のために、食品安全性の強化される必要があります。ベトナムの農産物はその他のTPP加盟国への輸出機会が増加し、低賃金労働や天然資源により競争力の優位性を得ると期待されています。

サービス貿易
全てのTPP締約国にとって一番重要となるのがサービス貿易です。その為、12カ国はこの地域での自由貿易に同意する必要があります。基本的なWTOの原則（内国民待遇、最恵国処置、市場参入、現地拠点）などを取り入れること以外に、TPPは他国のTPP締約国からのサービス供給の為自国の市場を開放し、そうでない場合は公約に示すようなネガティブな取り組みもする必要があります。

【包括的貿易】TPPは全てのレベルそして規模のビジネスの参加また発展を促進させる公約を含んでいます。ベトナムで非常に一般的な中小企業ビジネスは条約を理解し、チャンスを活用し、将来的に迅速な成長をする為の独自の貿易能力を構築する為に他国から支援されるでしょう。

【政府調達】全てのTPP締約国は透明性、予測可能で無差別政府調達市場を確保する必要があります。内国民待遇と差別をしないことは基本方針となります。政府は入札者に情報公開をし、入札者が準備し入札するために十分な時間を与え、入札者の守秘性を維持する責任があります。TPPはまた双方が公平且つ原則に従った入札を評価し、事前に明確に記入した入札書類を基に入札を認め、苦情や紛争解決に関する効果的なレジメの作成などをする必要があります。中国の入札者は低品質サービスだが低価格で提供する為圧倒的に入札で勝利する背景があるため、業績不振で低品質の入札資格を剥奪することにより、自国の利益を守る為にこれらの規則は全ての加盟国特にベトナムは必要となります。

【国営企業】ベトナムとマレーシアには多くの国営企業があります。米国及びその他の加盟国も同様に公共サービスやその他の活動に関わる国営企業を保有しています。TPP交渉者は国営企業に付与された優遇措置や他国の商品やサービスに対する国営企業の非差別化に関する規制施行の方法に重点を置いています。

TPPに参加することは、ベトナムにとって2014年から2015年の間に432の国営企業を民営化することになります。残りのベトナム国営企業はまたTPPでの標準規定を満たす為に厳格な改革をする必要があります。

【透明性及び腐敗対策】TPPは商品統治、また長い間投資家がビジネス拡大への決定を思い留まる原因の一つとして考えられてきたトランスペアレンシー・インターナショナルでの腐敗指数が世界175か国中119位に位置するベトナムのような国に対する贈収賄や腐食性の抗腐敗の規則を含んでいます。TPP締約国は国際貿易や投資に影響を与える公務員による汚職行為を犯罪とする法律を採用するまたは維持するか事で合意しました。締約国はまた効果的に腐敗防止の法律または規則を施行することを約束しました。TPPの加盟国として、透明性及び「清潔面」においてベトナムのビジネス環境はより改良され、今後さらに外国人投資家にとって道が開かれるでしょう。

　その他の重要な貿易と貿易関連の問題点、つまり関税と貿易円滑化、衛生植物検疫措置、労働、環境、紛争解決などに関してはTPPの第30章に説明されています。全てのTPP参加国は各国のメンバーにより国内で承認された協定に関する文書を公表するため手続きに取り掛かっています。
***
〈ご注意〉こちらの記事は皆様に情報をお届けする目的でのみ作成・掲載しておりますので、法的なアドバイスとして提供・構成することを目的としておりません。詳細につきましては、当法律事務所の注意書きをご一読下さい。
オリバー・マスマンはドウェイン・モリス・ベトナム法律事務所のディレクターです。上記に関するご質問等はomassmann@duanemorris.comまでお気軽にご連絡ください

Posted on by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann the Trans Pacific Partnership Agreement will drive Foreign Direct Investment into Vietnam

1. How does TPP drive FDI inflow into Vietnam ?

Commitments by TPP members on trade in goods and services will have a positive impact on improving the investment environment and attracting more foreign investment in Vietnam. Participating in the TPP will offer Vietnam the chance to continue creating institutions — like market economy, support for reform of Vietnam’s economic growth model and economic restructure. Vietnam, as being part of the TPP game, must also follow its strict principles, including transparency and regulatory coherence, to improve the business environment in a way to make it transparent and more predictable. Vietnam’s commitments on other fields such as intellectual property, environment, labor, government procurement, etc., will also create an attractive environment in Vietnam.

2. Besides textile and garment sectors, in your opinion, what are the sectors that Vietnam could boost FDI inflow thanks to the TPP?

Footwear and seafood are sectors that also receive many benefits. These products have been largely exported to the U.S, Japan and Canada. With reduction and elimination of import tariffs in these countries as a result of the TPP, exports value will gain breakthroughs and contribute to an increase in the national export value.

3. What will TPP mean for Vietnam’s FDI inflow in the long term?

There would be a diversion of FDI from China to Vietnam as companies move factories to the low-wage country and low labor costs. FDI from other countries to Vietnam would increase to take advantage of TPP preferential treatment. In the long term, a new trend of FDI would be formed in Vietnam as a result of the TPP. How the trend would be needs detailed analysis on the content of the agreement and how it works in practice.

4. What has been driving the growth of FDI inflow into Vietnam? Will they last?

Transparency, predictability and stability of the investment environment, the strengthening of protection for intellectual property rights, improved quality of the workforce, clearer and better investment legal framework are among factors that boost FDI growth in the upcoming time.

***
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.

Posted on by Dr. Oliver Massmann

ベトナムで太陽光発電を開発する為の政府の奨励措置 オリバー　マスマン（著） ドウェイン・モリス法律事務所

ベトナムは世界の日射マップ上で年間に最も日光があたる地域に位置する国々の中の一国です。特に電力需要や従来の電力生産源への危険性が増加している今、太陽光発電を開発することはベトナムに利益をもたらすでしょう。
再生可能エネルギープロジェクトへの投資を促進する為に、商工省（MOIT）は太陽光発電に対する奨励措置として特に投資資本、税金や土地使用権利に関する首相の第一決定書の草案を提案しています。これらの奨励措置は光電子方法を使用する太陽光発電プロジェクトが適用されます。以下の分析は最新版決定書草案を基にしており、正式決定書が承認された場合更なる変更点があるかもしれません。
投資奨励措置
【投資資本】投資家は太陽光発電プロジェクトへの投資をする為に、国内外の組織または個人から資本を集めることが可能です。このプロジェクトは投資信用と輸出信用奨励措置を受ける資格があります。具体的には、投資家は最大12年間プロジェクトの総投資資本の70％まで融資を申請することが可能です。さらに、投資家はまた最大12年間、輸出入契約価値の85％までを融資という形で輸出信用奨励措置を受けることが可能です。
【輸入税】太陽光発電プロジェクトはプロジェクトの固定資産を生み出す為に商品を輸入する際の輸入税が免除されます。例えば、ベトナムでは入手ができないプロジェクト運営のために必要な部品、材料、半製品などが該当します。
【法人税】現在の税制規則によると、太陽光発電プロジェクトもまた投資奨励措置を受ける分野のプロジェクトと同様に法人税免税または減税の優遇措置を受けることが可能です。例えば、10％の法人税率は15年間適用され、4年以内は免税となり、その後9年間は50％減税などがあります。
【土地】送電線網と繋がる太陽光発電、電線また変電所は特別投資優遇措置の資格があるプロジェクトと同様に土地使用や土地賃貸の免税または減税措置を受けることが可能です。とりわけこの優遇措置にはプロジェクトの開始日から3年以内は土地賃貸の免税が含まれています。
誰が買い手となるのか？
決定書草案によると、ベトナム電力（EVN）または委任された団体が電力購入者となります。電力売買は商工省により規定されたテンプレート版の契約に従い交渉また電力売買契約に署名することによって行われます。契約期間はプロジェクトの運営開始日から20年間となっています。当事務所では商工省のテンプレート版の契約の発行に関してお手伝いをしています。
関税率の供給
EVNは太陽光発電プロジェクトで生産された全ての発電量を電力購買価格がベトナムドンで1,800 VND/kwh から3,500 VND/kWhの間の価格になった時点で購入する責任があります。（これはアメリカセントで12 cents/kWh と16.7cents/kWhに相当します。）
建物の屋根に装置し送電網と繋ぐ太陽光発電プロジェクトに関して、電力生産量が消費量より多い場合は、その差異は3,150 VND/kWhの価格になった時点で購入されます。（VATは含まれず、15cents/kWhに相当します。）この価格はベトナムドンとアメリカドルの変動相場を基に調整されます。電力生産量が消費量よりも少ない場合、送電網から送られる電力は電力購入者が請求される通常の商業価格で購入しなければなりません。
上記の関税供給率はまだアジアのその他近隣諸国と比べると低い状態です。タイでは新関税供給率はタイバーツで90MW以下の太陽光発電の場合5.66THB/kWh（およそアメリカセントで15.7cents/kWh）となります。屋上太陽光では、関税供給率はそのプロジェクトの規模次第で変動します。250から1,000KWの屋上太陽光発電では、関税供給率は6.01 THB/kWh（およそ17 cents/kWh）となります。10から250KWまたは10KW以下の屋上太陽光発電の関税供給率はそれぞれ6.40 THB /kWh（およそ18 cents/kWh）または6.96 THB /kWh（およそ19 cents/kWh）となります。現在の決定書草案によると、ベトナムは屋上太陽光発電プロジェクトの規模の相違に関しては特に何も明記がなく、電力消費と生産量の相違を基に関税供給率を定めています。しかし一方で、フィリピンの屋上太陽光発電に関する関税供給率はベトナムの関税供給率よりも高くなっています。つまり、フィリピンペソで9.68P/kWh（およそ21 cents/kWh）。ベトナムの関税供給率はまだドラフト段階であり、最終版では無い為予測では次の草案では近隣諸国の比率に合わせて修正がされ高くなると思われます。これは投資を誘致する為に極めて重要となっています。
終わりに
決定書草案が承認されれば、ベトナムで太陽光発電を規制する史上初の法的文書となります。ベトナム政府はこの分野への外国人投資家を誘致する為、そして一日あたり5kWh平方メートルという平均日射のベトナムの豊富な太陽エネルギーを最大限に活用する為に努力しています。外国人投資家、アメリカの投資家は特にベトナムのクリーンエネルギーへの投資に注目しています。ベトナム政府はこのプロジェクトの支援を集める必要性に気づき、奨励措置を提供しています。このプロジェクトが短い期間では投資家の期待に応えられないかもしれませんが、この動きは肯定的に取られています。ベトナム、米国及びTPPその他加盟国に影響を与えるTPP開発条約は一般的にエネルギー分野、特にクリーンエネルギーの開発への道しるべとなるでしょう。従って、これらの要因は米国の投資家や同様にTPPの他のメンバーに成長市場そして豊富な投資奨励措置を提供しています。

オリバー　マスマンはドウェイン・モリス・ベトナム法律事務所のディレクターです。取り扱い分野は国際企業税務、発電/水処理プロジェクト、石油・ガス及び電気通信企業、民営化と株式化、M&Aそして多国籍企業のクライアントのベトナムに対する投資とベトナム事業経営に関する一般企業法務を担当しています。ご連絡はomassmann@duanemorris.comにお願い致します。
〈ご注意〉こちらの記事は皆様に情報をお届けする目的でのみ作成・掲載しておりますので、法的なアドバイスとして提供・構成することを目的としておりません。詳細につきましては、当法律事務所の注意書きをご一読下さい。

Posted on by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann BREAKING NEWS The Trans Pacific Partnership Agreement VIETNAM WILL REAP HUGE BENEFITS

Trade ministers reached an agreement on the TPP on Monday (05 October 2015) after five days of intensive talks, following their failure to reach consensus in Hawaii in late July.
The TPP is one of the largest trade agreements ever to be negotiated, involving some of the largest nations in the world with an annual gross domestic product of nearly $28 trillion that represents roughly 40 percent of global GDP and one-third of world trade. Countries participating in the negotiations include those throughout the Asia- Pacific region, namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. The TPP is touted to be the 21st century trade agreement, set a template for regional and global trade and investment and incorporate next-generation issues.
The TPP addresses a number of rising trade issues which have been stumbling blocks to global trade recently, such as e-commerce, financial services and cross-border electronic communications. Other cross-cutting issues are also covered, such as role of state-owned enterprises in the economy, government procurement, and other topics.
Vietnam would be the largest beneficiary of this trade pact as a result of its strong trade ties with the United States, and its highly competitive positions in industries such as manufacturing where China is gradually losing its competitive advantage. Vietnam is also considered as one of the countries among Japan, Malaysia, Brunei, New Zealand that the United States would like to establish formal trade agreements. Statistics shows that by participating in the TPP, Vietnam’s GDP would add an additional increase of 13.6% to the baseline scenario.

Some major points in the TPP are as follows:
Free trade zone: tariff and quotas have been long used as trade measures to protect domestic industries from cheap overseas goods and efficient sources of collecting revenue for the states, especially for developing ones. However, tariff and quotas have been used less compared with other non-tariff measures in the past years. With the TPP, tariff and non-tariff barriers are even reduced and removed more substantially across all trade in services and goods. TPP Parties, especially Vietnam, would gain many benefits from the upcoming business opportunities and open market access resulting from the trade pact.
Trade in goods
With tariff and non-tariff reduction and elimination on industrial goods, high quality- jobs will be supported and trade in a 800-million people market will increase. Most tariff elimination will be implemented immediately, with tariff on some other products will be reduced over a committed period of time. For elimination and reduction of restrictive policies on agricultural goods, food security will be enhanced. Vietnam’s agricultural products will have more opportunities to be exported to other TPP members and gain their competitive advantage due to cheap labors and natural endowments.
Trade in services
Trade in services is of utmost importance to all TPP Parties. Thus, all 12 countries give consent to a liberalized trade in this area. Besides incorporating basic WTO principles (national treatment, most-favored nation treatment, market access, and local presence), the TPP takes a negative approach, meaning that their markets are fully opened to service suppliers from other TPP Parties, except otherwise indicated in their commitments.
Comprehensive trade: The TPP includes commitments that seek to encourage participation and development of businesses of all levels and sizes. Small-and medium-sized businesses, which are quite popular in Vietnam, will receive assistance from other countries to understand the agreement, take advantage of their opportunities, build their own trade capacity to grow fast in the future.
Government procurement: All TPP parties commit to ensure transparent, predictable and non-discriminatory government procurement markets. National treatment and non-discrimination are core principles. Governments undertake to timely publish information on tender, allow sufficient time for bidders to prepare for and submit bids, maintain confidentiality of tenders. The TPP also requires its Parties assess bids based on fair and objective principles, evaluate and award bids only based on criteria set out in notices and tender documentation, create an effective regime for complaints and settling disputes, etc. These rules require all Parties, especially Vietnam, in the context of China’s bidders predominantly win the bids with cheap offer price but low-quality services, to reform their bidding procedures and protect their own interests by disqualifying tenders with poor performance and low capacity.
State-owned enterprises: Vietnam and Malaysia have many state-owned enterprises. The United States and others have some as well which are involved in public services and other activities. TPP negotiators have place emphasis on how to regulate operation of such enterprises, preferential treatment granted to these enterprises, non-discrimination of the state-owned enterprises against other countries’ goods and services. Participating in the TPP would then be a driving force for Vietnam in its privatization process of 432 state-owned enterprises in the 2014-2015 period. The remaining Vietnamese state-owned enterprise will also need to undergo strict reform procedures to meet standard requirements in the TPP.
Transparency and anti-corruption: The TPP includes rules on goods governance, bribery and corrosive anti-corruption, which have long been considered as one of the factors that discourage investors when deciding their business expansion, especially in countries like Vietnam with corruption index ranking Number 119 out of 175 countries globally according to Transparency International. The TPP Parties have agreed on adopting or maintaining laws criminalizing corruption behaviors by a public official affecting international trade or investment. Parties also commit to effectively enforce their anticorruption laws and regulations. As part of the TPP, Vietnam’s business environment in terms of transparency and “cleanliness” would be much improved, paving the way for more foreign investment in the upcoming time.
Other important trade and trade-related issues are covered in 30 chapters of the TPP, ranging from customs and trade facilitation; sanitary and phytosanitary measures; technical barriers to trade; trade remedies; investment; intellectual property; labor; environment; dispute settlement; etc. All TPP parties are conducting procedures to release the text of the agreement, which would then have to be approved domestically in each country member.
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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.

Posted on by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann Solar Power Vietnam Breaking News: First Ever Regulations GOVERNMENT’S INCENTIVES TO DEVELOP SOLAR POWER PROJECTS IN VIETNAM

Vietnam is among the countries with the world’s highest annual sunshine allocation on the world’s solar radiation map. This is an advantage for Vietnam in its efforts to develop a solar power industry, in the context of increasing demand for electricity and the potential risks of traditional electricity production sources.
To encourage investment in renewable energy projects, the Vietnam Ministry of Industry and Trade (MOIT) has proposed the first Draft Decision of the Prime Minister on incentives for solar power projects, especially in terms of investment capital, tax and land use rights. These incentives would apply to power generation projects using the photovoltaic method. The following analysis is based on the latest Draft Decision, which will be subject to further changes when the official decision is adopted.
Investment incentives
Investment capital: Investors may mobilize capital from domestic or overseas organizations and individuals to invest in solar power projects. Such projects are entitled to investment credit and export credit incentives. In particular, investors could apply for a loan of up to 70 percent of the total investment capital of their project with a maximum term of 12 years. Moreover, investors could also enjoy export credit incentives in a loan of up to 85 percent of the export/import contract value, also with a maximum term of 12 years.
Import duty: Solar power projects are exempted from an import duty on those goods imported to create fixed assets of the projects; these include components, materials and semi-finished products that are not available in Vietnam and that are needed for the project’s operation.
Corporate income tax: According to current taxation regulations, solar power projects will also enjoy the same corporate income tax exemption and reduction as projects in sectors that are receiving investment incentives. For example, a corporate income tax rate of 10 percent will be applied for 15 years, tax exemptions will occur within four years and taxes will be reduced by 50 percent in the next nine years.
Land: Solar power projects, lines and transformer stations connected to the national grid enjoy the same exemptions and reductions in land use and land rental as projects entitled to special investment treatment. Such incentives, among other things, include exemption of land rental within three years from the operation date of the project.
Who will be the off-taker?
According to the Draft Decision, the Electricity of Vietnam (EVN) or its authorized member units will be the power purchaser. The power sale and purchase will be conducted by negotiating and signing the power sale and purchase agreement according to the template agreement stipulated by the MOIT. Terms of the agreement extend 20 years from the commercial operation date of the project. Duane Morris will continue to monitor the issuance of the template agreement by the MOIT.
Feed-in-tariff (FIT) rate
EVN is responsible for buying the whole electric output from solar power projects, with the electric buying price at the point of electricity receipt to be 1,800 Vietnamese dong/kwh and 3,500 Vietnamese dong/kWh (equivalent to 12 U.S. cents/kWh and 16.7 U.S. cents/kWh).
For solar power projects installed on the roof of a house connected to the grid, if the electricty generated is more than that consumed, the difference to be bought at the point of electricity receipt is 3,150 Vietnamese dong/kWh (not including VAT, equivalent to 15 U.S. cents/kWh). This price will be adjusted based on the fluctuation rate between the Vietnamese dong and U.S. dollar. If the electricity generated is less than that consumed, the electricity received from the grid must be paid at the normal commercial price charged by the electricity purchaser.
The above FIT rate is still low compared to other neighboring Asian countries. In Thailand, the new FIT is THB 5.66/KWh (about 15.7 U.S. cents/kWh) for a solar farm of less than 90MW. For a solar rooftop, the FIT rate varies depending on the capacity of the project. With a solar rooftop of 250–1,000 KW, the FIT would be THB 6.01/kWh (about 17 U.S. cents/kWh). The FIT for solar rooftops of 10–250 KW and less than 10KW are THB 6.40/kWh (about 18 U.S. cents/kWh) and THB 6.96/kWh (about 19 U.S. cents/kWh), respectively. In the current Draft Decision, Vietnam does not draw any difference between the capacity of the solar rooftop projects but sets the FIT rate based on the difference between electricity consumed and generated. Meanwhile, the FIT in the Philippines for solar power projects is also higher than that of Vietnam, i.e., P 9.68/kWh (equivalent to 21 U.S. cents/kWh). As Vietnam’s FIT is still in the drafting process and not yet final, the anticipation is high for this to be amended in the next draft to reach regional levels. This is of vital importance to attract investment.
Conclusion
If the Draft Decision is adopted, it would be the first-ever legal document regulating solar energy in Vietnam. The Government of Vietnam strives to attract foreign investment in the sector and to take full advantage of the plentiful solar energy—an average solar radiation of 5kWh/m2 per day—across Vietnam. Foreign investors, especially those in the U.S, have been eyeing Vietnam for their investment in clean energy. The Government of Vietnam is aware of the need to garner support for these projects and is offering incentives. While these projects may not meet investors’ expectations in the immediate future, the movement appears positive. The developing agreement on the Trans-Pacific Partnership (TPP), affecting Vietnam, the United States and 10 other countries, points the way toward a developing energy sector in general—and clean energy in particular. Therefore, these factors suggest a growing market and plenty of investment incentives for U.S investors, as well as other members of the TPP.
Oliver Massmann is the General Director of Duane Morris Vietnam LLC. Mr. Massmann practices in the area of corporate international taxation and on power/water projects, matters related to oil and gas companies and telecoms, privatization and equitization, mergers and acquisitions, and general commercial matters for multinational clients in relation to investment and doing business in Vietnam. He can be reached at omassmann@duanemorris.com.

Disclaimer: This article is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this article are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.

Posted on by Dr. Oliver Massmann

Vietnam Foreign Direct Investment

By Oliver Massmann and Manfred Otto – Duane Morris Vietnam LLC

Foreign Direct Investment

A Brief Overview
Vietnam is undergoing fundamental changes to form the basis for its attractiveness and competitiveness in preparation for the ASEAN Economic Community (AEC), the upcoming trade agreements including the EU-Vietnam FTA and the Transpacific Partnership Agreement (TPP).
Since July 2015, a number of new laws and regulations governing foreign investment, enterprises, real estate and foreign ownership limits have come into effect. For example, the new Law on Investment and the new Law on Enterprises:
(i) clarify definitions of foreign-invested enterprises;
(ii) facilitate M&A activities;
(iii) reduce the number of prohibited and conditional business sectors;
(iv) reduce statutory business licensing times;
(v) provide more flexibility with regard to corporate governance (such as multiple legal representatives and lower voting thresholds); and
(vi) create more favourable conditions for shareholder lawsuits.
In addition, new laws and regulations affecting foreign ownership of real estate have come into effect. Foreigners can now own apartments and for the first time buy houses. They are now also permitted to sublease and inherit real estate.
With the coming into effect of several international trade agreements and more particularly, the EVFTA, EuroCham members are looking forward to the positive changes that will be implemented and that will further business incentives as well as contribute to Vietnam’s growth.
Vietnam as an attractive FDI destination
In addition to the numerous legal changes, Vietnam has fundamental elements that participate to its continued growth. For instance, Vietnam is in a demographic golden age, with 25% of its 90 million people population between 10 and 24 years old. GDP per capital is increasing drastically as Vietnam has the fastest-growing middle class in South East Asia – (12.9% per annum over the period 2012-2020). Along with a high literacy rate and education levels, comparatively low wages, connectivity and central location within ASEAN, more and more foreign investors choose Vietnam as their hub to service the Mekong region and beyond.
Vietnam’s attractive profile is reflected in its generally welcoming of foreign direct investment (FDI) in manufacturing activities. The gradual opening of most service sectors under Vietnam’s WTO commitments schedule that began in 2007 has been completed in 2015. Domestic law has expanded market access in some sectors beyond those of Vietnam’s WTO commitments. For example, foreign shareholding in public companies that was previously capped at 49% is now generally open for to up 100% foreign ownership. Vietnam also grants investment incentives including tax breaks in areas, such as high-tech, environmental technology, and agriculture, where European businesses are global leaders.
Furthermore, in 2014, Vietnam recorded $21.92 billion in FDI with a total of 1843 investment licenses for foreign invested projects with a registered capital of $16.5 billion, representing a 14% increase from the previous year. Among the foreign investors, the EU is an increasingly important source of FDI for Vietnam as ‘according to the Foreign Investment Agency of the Vietnamese Ministry of Planning and investment, investors from 23 out of 28 Member States of the EU injected a total committed FDI worth US$19.1 billion into 1566 projects over the course of the past 25 years (by 15 December 2014)’. With this strong activity, in 2014, the EU positioned itself as fifth in the top FDI partners of Vietnam with a combined committed FDI of US$587.1 million.

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Source: ‘Vietnam’s logistics market: Exploring the opportunities, Hong Kong Trade Development Council (HKTDC)

In addition to FDI, the EU-Vietnam’s strong trade relationship can be seen through programmes like the Multilateral Trade Assistance Project (MUTRAP) which accounts for over €35.12 billion. MUTRAP has been instrumental in supporting Vietnam’s negotiating efforts during the WTO accession process and now continues to assist Vietnam in the implementation of trade commitments. In terms of trade, both the EU and Vietnamese businesses are expected to benefit under the EVFTA. The FTA will gradually eliminate tariffs for over 99% of goods and services besides other mechanisms to support bilateral trade. On 4 August 2015, the EU and Vietnam reached an agreement in principle for the free trade deal, an agreement that will also attract further FDI into the country.
Vietnam’s top trading partners 2013
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Finally, the EU’s strong commitment to support Vietnam in its modernisation and integration in the world economy is mirrored by the aid programmes. In line with Vietnam’s 2020 socio-economic plan, the EU has increased its aid by 30 % reaching 400 million euros via its multi-annual indicative programme for the period of 2014-2020 focusing on the development of clean energy in Vietnam.

Further improvements necessary
It is clear that Vietnam’s development and its attractiveness to foreign investors are undeniable as Vietnam is constantly improving its business environment.
However, as of this writing, guiding regulations for many new laws have still not been published, and investors are experiencing delays in the processing of applications. We expect processing times to improve once the new implementing regulations come into effect and officials get accustomed to the changes.
Another issue that has been highlighted by our members is that many foreign investors still face significant challenges when dealing with Vietnam’s bureaucracy. Tax filing, customs clearance, business registration and licensing, and other administrative procedures are often delayed, outcomes can be unpredictable, and businesses find themselves spending resources on administration that they would prefer to invest in expanding their core activities.
Despite remaining hurdles, the national government of Vietnam has expressed an understanding of the issues surrounding foreign investment. Providing foreign investors increased access to its market, the stream of FDI is expected to continue. For many foreign investors the positive economic development of the country and its fundamentals substantially outweigh potential risks.
In this light, EuroCham wishes to present the key issues that our members face in their activity in Vietnam along with some key recommendations. EuroCham hopes to engage in a constructive dialogue and increasing cooperation with the relevant authorities on all the issues presented in this edition in order to improve the business environment for all enterprises in Vietnam and contribute to the country’s fast modernisation.

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1‘Vietnam; from golden age to golden oldies’, UK FOC, 07/01/15. Available at
2‘Report revises 2014 FDI figures’ Viet Nam News, 18/03/15. Available at
3‘Investment -EU-Vietnam economic and trade relations’, Delegation to the European Union to Vietnam, 2015. Available at
4‘Vietnam’s logistics market: Exploring the opportunities, Hong Kong Trade Development Council (HKTDC), 20/01/15. Available at
5‘Trade – EU-Vietnam economic and trade relations’, Delegation to the European Union to Vietnam, 2015. Available at
6‘European Union, Trade in goods with Vietnam’, European Commission DG Trade, 10/04/15, p.9. Available at
7‘Development Cooperation’, Delegation to the European Union to Vietnam, 2015. Available at

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Posted on by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann New Decree Guiding Enterprise Law on Enterprise Registration – Quicker Timeline and Simplified Procedure

On 14 September 2015, the Government issued Decree No. 78/2015/ND-CP on enterprise registration (“Decree 78”). This is a long-awaited decree guiding the 2014 Enterprise Law, replacing Decree No. 43/2010/ND-CP on enterprise registration and Decree No. 05/2013/ND-CP amending Decree No. 43/2010/ND-CP on administrative procedures. Decree 78 will take effect on 01 November 2015. Some positive changes of this new decree are discussed below:
Enterprises are now able to register their operation online
Online enterprise registration is a procedure carried out by the owner of the enterprise or the enterprise itself via the National information gate on enterprise registration.
Online enterprise registration dossier includes the same documents as required by the paper dossier and are converted into electronic form. Online enterprise registration dossier has the same validity as the usual paper one.
Who can execute the enterprise registration documents
The 2014 Enterprise Law allows enterprises to have more than one legal representatives. Signature of each legal representative in enterprise registration documents has the same legal validity. In addition, not only the owner of the enterprise but also the enterprise itself (through its legal representative(s)) could execute the enterprise registration documents and holds responsible for the lawfulness, accuracy and truthfulness of the declared information in the dossier.
Decree 78 no longer requires enterprises:
– Register changes in enterprise registration content within 10 working days from the date the enterprise decides on the changes, except as otherwise required by law;
– Submit their financial statements to the business registration authority in accordance with the law.
Role of the Request for enterprise registration and the Enterprise Registration Certificate (ERC)
The ERC concurrently serves as the Tax Registration of the enterprise and the ERC is not a business license. In case there is any inconsistency between the electronic ERC, Branch Registration Certificate, Representative Office Registration Certificate, Certificate on business location and the paper ones, the one which records information in the enterprise registration dossier has legal validity.
Each enterprise is issued with an enterprise code indicated in the ERC. This code is no longer the business registration code but tax code of the enterprise.
Simplified enterprise registration procedure
In an attempt to reforming administrative procedures and fighting against corruption, Decree 78 clearly states that the enterprise registration authority is not allowed to request for additional documents or other documents not required in the enterprise registration dossier by the law. In this regards, the number of required documents in the application dossier is also reduced significantly.
Time to get an ERC after submission of a valid dossier is shortened to three working days instead of five working days as previously. However, it needs to be seen in practice whether the authority sticks to this timeline.
In case there is any change to the business lines of the enterprise, it does no longer have to register the new business lines but only needs to notify the authority on the same. The notification dossier removes documents confirming the legal capital by the authority in case the new business line requires legal capital; or a valid copy of the certificate of practising for individual according to the specialized areas.
Notably, in a joint stock company, if a founding shareholder has not fully paid for the registered shares, it will automatically no longer be company’s shareholder and its name will be removed from the list of founding shareholders of the company.
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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.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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